1. Assume the consolidated balance sheet for the commercial banking system:

LIABILITIESASSETS

Demand deposits$ 300 bnTotal reserves$ 60 bn

Advances$ 240 bn

Calculate:

a) the size of liquidity ratio ___________;

b) the maximum amount by which the commercial banking system can expand the money supply by lending __________;

c) the maximum amount of the banking system advances expansion ___________.