5. Working through a change in the reserve requirement Assume that the following table portrays the balance sheet of First Southern bank. Asset: Liabilities and Net Worth Vault Cash $50,000 Deposits $850,000 Deposits at Fed $200,000 Loans $500,000 Total $350,000 Total $350,000 First Southern's bank reserves are equal to . If First Southern bank wanted to maintain 0.10 of its assets as reserves against checking deposits, First Southem' would maintain as reserves. Therefore, it would hav_ as additional reserves over and above the desired amount. If First Southern uses the reserves above the desired level to extend additional loans, the money supply would increase by - If First Southern wanted to maintain 0.05 of its assets as reserves against checking deposits, First Southern' would maintain as reserves, additional reserves would be , and the increase in the money supply would be . The increase in the money supply will be V if First Southern chooses a desired reserve ratio of 0.05