DEPOSIT CREATION BY DEPOSITORY INSTITUTIONS INCREASE THE MONEY SUPPLY (36 Marks). The T-Accounts in this table show how a $3,500Ms. Aby deposited in her account at Bank A changed the Bank's balance sheet and, subsequently, the balance sheets of other depository institutions. Assume that all depository institutions keep 4.5 percent target (desired) reserve ratio (i.e. v=0.045 ) and quickly loan out excess reserves (i.e. keep zero excess reserves), and the public does not hold part of their deposits in cash (i.e. no cash drain). Calculate your answers to the nearest dollar: Note: When your answers include decimals, round to three (3) decimal places. Do not include dollar signs or commas separating thousands. Part 1: Assume that Bank A lends its excess reserves to Mr. Jones. Show Bank A's new balance sheet Part 2: Suppose Mr. Jones spend all the money borrowed, and his creditor(s) deposit their revenues at Bank B. Bank B lends its excess reserves to Ms. Davis. Show Bank B's balance sheet after the loan has been made out. Part 3: Suppose Ms. Davis spends all the money borrowed, and her creditor(s) deposit thier revenues at Bank C. Bank C lends its excess reserves to Mr. Watson. Show Bank C's balance sheet after the loan has been made out. Part 4: Mr. Watson spends all the money he borrowed, and his creditor(s) deposit their revenues at Bank D. Bank D lends its excess reserves to Ms. Gresham. Show Bank D's balance sheet after the loan has been made out. Part 5: Calculate the total deposits in all depository institutions as a result of Ms. Aby's original $3,500 deposit, the total loans these institutions have extended, and the total amount added to their reserves when the above process continues to completion: ( 3 marks each) a) Credit (or deposit) multiplier b) Total Deposits c) Total Reserves d) Total Loans