(a) Explain THREE (3) reasons what gives money value even though they are token money. (6 marks)

(b) The following balance sheet is for a commercial bank. Assume the required reserve ratio is 4 percent.

Assets Liabilities and Net Worth Reserves $100,00 Checkable Deposits $300,000 Loans 140,000 Stock shares 200,000 Securities 60,000 Property 200,000

(i) Calculate the required reserves. (3 marks) (ii) Calculate the maximum amount that the money supply can be expanded. (3 marks) (iii) If the reserve ratio rises to 10%, calculate the maximum amount that the money supply can be expanded.