An economy starts with $100,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $92,50.

1.Draw the banks T-account

2.In which banking system is this bank operating?

3.Estimate the banks reserve ratio.

4.Considering the same reserve ratio for all banks in the economy calculate the money multiplier.

5. Assume all banks in the economy have the same reserve ratio as this bank and an increase in reserves of $1500 for this bank. Estimate the potential deposits increase for all banks