How do I do 4-13

Bank Balance Sheets - Use the balance sheet below to answer the questions. Assets Liabilities Required reserves $2,000 Demand deposits $20,000 Excess reserves $0 Customer loans $7,000 Government securities (bonds) ? 4. Calculate the total amount of government securities this bank owns. 5. Calculate the required reserve ratio. Explain how you got your answer. o. Suppose that an individual deposits $10,000 of cash into her checking account. What is the immediate effect of the cash deposit on the M1 measure of the money supply? Explain. 7. What is the dollar value of the bank's required reserves after the $10,000 cash deposit? Explain. 8. What is the dollar value of the bank's excess reserves immediately after the $10,000 cash deposit? 9. Calculate the maximum increase in the money supply as a result of the $10,000 deposit. Show work. 10. What are two different behaviors that could prevent the money supply from increasing by the maximum amount? 11. Assume instead that the government buys $10,000 of securities. What is the immediate effect on the M1 measure of the money supply? Explain. 12. Calculate the maximum increase in the money supply when the government buys $10,000 of securities. Show your work