Assume that there are two banks, Bank Amy and Bank Karla, in the banking system. Bank Amy receives a primary deposit of $750,000, and it must keep reserves of 15% against deposits. Bank Amy makes a loan in the amount that can be safely lent.

a. Show what Bank Amys balance sheet of assets and liabilities would look like immediately after the loan.

b. Assume that a check is drawn against the primary deposit made in Bank Amy and is deposited in Bank Karla. Show what the balance sheet of assets and liabilities would look like for each of the two banks after the transaction has taken place.

c. Now assume that Bank Karla makes a loan in the amount that can be safely lent against the funds deposited in its bank from the transaction described in part (b) above. Show what Bank Karlas balance sheet of assets and liabilities would look like after the loan.