IGNORE LOANS

mead 5) Use the following balance sheet to evaluate Tar Valon Bank: Assets Liabilities Reserves - Total - $20,000 Demand Deposits - $50,000 Bonds - $15,000 Leans $15,000 Net Worth - $0 a) Assume the Reserve Requirement is 20%. i) What is the dollar value of new loans that the bank can make?} 10,060 ii) What is the maximum potential change in the money supply given the new loans?$ 50 , 000 b) The FED decides that it needs to decrease the money supply by $10,000. i) Should it buy or sell bonds? sell bonds ii) Calculate the dollar value of bonds it needs to buy/sell. $ 10 , 00. c) Instead of buying/selling bonds, assume the FED decides to simply change the Res. Req. i) Should it increase or decrease the Res. Req.? Increase 6) Use the following balance sheet to evaluate Seinfeld Bank: Assets Liabilities Reserves - Total - $5,000 | Demand Deposits - $100,000 Bonds - $35,000 Loans $60,000 Net Worth - a) Assume the Reserve Requirement is 5%. i) What is the dollar value of new loans that the bank can make? $ ( ii) What is the maximum potential change in the money supply given the new loans? $ b) The FED decides that it needs to buy bonds and only wants to change the money by $100,000. i) Calculate the dollar value of bonds it needs to buy. $ 100, 000 c) Assume The FED decides to buy $2,000 worth of bonds, but only wants it to change the money supply by $40,000. i) Calculate the new value of the Res. Req. needed to accomplish this goal? 60, 000