Initially, the Republic of Gorgonzola has no commerclal banking system. To make trading easier and eliminate the need for barter, the government directs the central bank of Gorgonzola to put into circulation 5,000,000 identical paper notes, called guifders. The central bank prints the guilders and distributes them to the people. At this point the Gorgonzolan money supply is 5,000,000 million guilders In order to keep the money safe, some Gorgonzolan entrepreneurs set up a system of commercial banks. When people need to make a payment, they can elther withdraw their guilders or write a check on their accournt. Checks give the banks pemission to transfer guiders from the account of the person paying by check to the account of the person to whom the check is made out. With a system of payments based on checks, the paper guilders need never leave the banking system, although they flow from one bank to another as a depositor of one bank makes a payment to a depositor in another bank. Deposits do not earn interest in this economy Let's suppose for now that people prefer bank deposits to cash and so deposit all of their guilders with the commnercial banks. Assume that () initially, the Gorgonzolan central bank puts 5,000,000 guilders into circulation and (2) commercial banks desire to hold reserves of 20 percent of deposits. Assume that the public holds no currency Instructions: Enter your responses as whole numbers a The consolidated balance sheet of Gorgonzolan commercial banks after the initial deposits is Initial balance sheet Assets Liabilities Currency Deposits b. The consolidated balance sheet of Gorgonzolan commercial banks after one round of loanss is Balance sheet after first round of loans Assets Liabilities Currency (- reserves) Deposits Loans c The consolidated balance sheet of Gorgonzolan commercial banks after the first redeposit of guilders is Balance sheet after redeposits Assets Liabilities Currency ( reserves) Deposits Loans d. The cormsolidated balance sheet of Gorgonzolan commerclal banks after two rounds of loans and redeposits s Bnienca rho08 aLL d. The consolidated balance sheet of Gorgonzolan commercial banks after two rounds of loans and redeposits is: Balance sheet after second round of loans and redeposits Assets Liabilities Currency ( reserves) Deposits Loans e. The final values of bank reserves, loans, deposits are Final consolidated balance sheet Assets Liabilities Currency Final value of bank Deposits reserves Loans The final value of the money supply is: guilders