Need help for Q 11 only

Q6

Suppose that in a country, there are only two banks, Bank A and Bank B. The file HW4 - Bank Balance Sheets shows their balance sheets. Here are some simplifying assumptions to make our lives a bit more bearable:

1. The country uses dollars as its unit of accounts.
2. There are no travelers' checks.
3. There are no fancy accounts in this country like money market mutual funds deposits.
4. Other deposits consist of saving deposits by households as well as small denomination (less than $100,000) time deposits.
5. The amount of currency held by the non-bank public is 10 percent of demand deposits.
6. All the reserves are held at the central bank. They also call their central bank "the Fed".
7. The required reserve ratio is 10 percent.

We conclude that the excess reserves held by Bank A is 50000 dollars and that held by Bank B is 0 dollars.

Q11

Assets Uses of Funds Bank A Balance Sheet Liabilities + Net Worth Sources of Funds Demand Deposits Other Deposits Reserves $65,000 $150,000 $1,000,000 Treasury Bonds $85,000 Borrowing From the Fed From Fed Funds Market $50,000 $100,000 Loans $1,350,000 Net Worth $1,500,000 Total $200,000 $1.500,000 Total Bank B Balance Sheet Assets Uses of Funds Liabilities + Net Worth Sources of Funds $10,000 Demand Deposits Other Deposits Reserves $100,000 $940,000 Treasury Bonds $35,000 Borrowing From the Fed From Fed Funds Market $30,000 Loans $1,255,000 Net Worth $1,300,000 Total $230,000 $1,300,000 Total Consider the information in Question 6 and ignore all those things that happened in Questions 7 to 11. Start from the beginning. Brandon borrows $100,000 from Bank A to buy a yacht from Carolyn. Carolyn will deposit that money in her bank, which is Bank B. Bank A lends the money by crediting Brandon's savings account by $100,000. After the loan is made and before that money is transferred to Bank B, the entries in Bank A's balance sheet will look like the following (all in dollars): Demand deposits 150000.0 Other deposits 900000.00 Borrowing from the Fed = 50000.00 Borrowing from the Fed Funds market = 100000.00 Net worth = 200000.00 Reserves = 0.00 Treasury bonds = 55000.00 0.75/2 Loans = 1385000.00 Assets Uses of Funds Bank A Balance Sheet Liabilities + Net Worth Sources of Funds Demand Deposits Other Deposits Reserves $65,000 $150,000 $1,000,000 Treasury Bonds $85,000 Borrowing From the Fed From Fed Funds Market $50,000 $100,000 Loans $1,350,000 Net Worth $1,500,000 Total $200,000 $1.500,000 Total Bank B Balance Sheet Assets Uses of Funds Liabilities + Net Worth Sources of Funds $10,000 Demand Deposits Other Deposits Reserves $100,000 $940,000 Treasury Bonds $35,000 Borrowing From the Fed From Fed Funds Market $30,000 Loans $1,255,000 Net Worth $1,300,000 Total $230,000 $1,300,000 Total Consider the information in Question 6 and ignore all those things that happened in Questions 7 to 11. Start from the beginning. Brandon borrows $100,000 from Bank A to buy a yacht from Carolyn. Carolyn will deposit that money in her bank, which is Bank B. Bank A lends the money by crediting Brandon's savings account by $100,000. After the loan is made and before that money is transferred to Bank B, the entries in Bank A's balance sheet will look like the following (all in dollars): Demand deposits 150000.0 Other deposits 900000.00 Borrowing from the Fed = 50000.00 Borrowing from the Fed Funds market = 100000.00 Net worth = 200000.00 Reserves = 0.00 Treasury bonds = 55000.00 0.75/2 Loans = 1385000.00