1. Supppse Happy Bank starts with $25 billion in bank capital and currently has $50 billion in reserves (the required reserve and excess reserve) the resere requirement is 20 % and excess reserev amoutn to $5 billion.

a. What is happy bank's deposit and amount of loans given up? Please contrust basic balance sheet conssiting of deposit, capital, reserve, and loans for happy banks.

b. suppose that 8% of the borrows from Happy Bank default and these bank loans because worthless. show the bank's new balance sheet.

c. by what percentage do the bank's total assets decline? by what percentage does the bank's capital decline? which change is larger & why?