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2) Calgary Finance Bank has the following balance sheet: Assets Reserves Loans $100 $1000 Liabilities Chequable Deposits Capital $1000 $100 Assume there is no excess
2) Calgary Finance Bank has the following balance sheet: Assets Reserves Loans $100 $1000 Liabilities Chequable Deposits Capital $1000 $100 Assume there is no excess reserve. One day Jack luckily finds a bill of $20 underneath his mattress and he deposits it into this bank. a) Describe how this deposit may affect Calgary Finance Bank's balance sheet. b) What will be the excess reserve now? c) To keep reserve ratio at target level, what would this bank do? How would the action affect its balance sheet? d) If all commercial banks have the same target reserve ratio as this bank, and there is no cash drain, what will be the change in total deposits for the whole banking system after the process of money creation is completed
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