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Hypothesis: The desired (mandatory) reserve rate is 10% and the bank's initial balance sheet is: Active passive Loans: $900 Deposits: $1000 Total reserve at the
Hypothesis: The desired (mandatory) reserve rate is 10% and the bank's initial balance sheet is: Active passive Loans: $900 Deposits: $1000 Total reserve at the central bank $100 The bank receives a new deposit of $100 bills. a) Show the bank's balance sheet immediately after receiving the deposit (Hypothesis: the bank wants to keep only the exact amount of reserve required at the central bank). (7.5 points) b) What is the total change in deposits and the value of money supply creation? (7.5 points) c) It is assumed that all deposits created will be made in this same bank (this is the only one economy bank). What will the bank's balance sheet be? (10 points)
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