Money and the lHanking System: Aplia Homework Attempts: Average: /4 8. Working through a change in the reserve requirement Assume that the following table portrays the balance sheet of First Southern bank. Assets Liabilities and Net Worth Vault Cash $150,000 Deposits $900,000 Deposits at Fed $250,000 Loans $500,000 Total $900,000 Total $900,000 First Southern's bank reserves are equal to s If the Federal Reserve sets the required reserve ratio to 0.20, First Southern's in excess reserves. required reserves would be s Therefore, it would have If First Southern loaned all of its excess reserves, the maximum amount by which the money supply could subsequently increase is If instead the Fed were to set the required reserve ratio to 0.10, required reserves would be s and the maximum increase in the money supply would be s excess reserves would be in the money supply will be smaller if the Fed chooses a required reserve ratio of The