In the country of SpringNow, the public is holding a total of $2,000. Total lending in

the banking sector, which has 4 identical banks, is $30,400. The currency deposit ratio

is 5% and the reserve requirement is 15%. The banks may hold excess reserves.

(a) Describe the balance sheet for one of the 4 banks.

(b) How much reserves do the banks hold as a fraction of total deposits?

(c) How large is the money supply in this economy?

(d) What is the money multiplier in this economy?

(e) How would a $2,400 open market sale of bonds by SpringNow central bank change

total reserves and money supply in SpringNow? Assume that all the banks behave

identically.