Part 1:

Balance Sheet First Bank | | Assets Liabilities + Net worth , | Reserves $50,000 |Deposits $200,0 . | Loans | $120,000 | \\_Stocks of district Federal Reserve $50,000 Owner's Equity $20,00 a) Suppose First Bank targets a reserve ratio of 10%. In other words, consider 10% to be the required reserves ratio. What would be the target amount of reserves (required reserves) that First Bank will keep? Show your calculation. (e b) What maximum new loan will First Bank extend if it maintains its target reserve (required reserves) and does not keep any excess reserves? S c) How would you rewrite First Bank's balance sheet, assuming that First Bank extended the maximum amount of the new loan? Show the new balance sheet (T account) SERD d) What maximum new money would be created if First Bank makes the "New" loan as you showed in part ? Please assume that the borrower who received the new loans spent it on goods and services, and the sellers of those goods and services deposited that payment received in a checking account. You do not have to create balance sheets; use the money multiplier concept to find the maximum amount of new money created from the "New" loans. SN~ . Part 2: Please choose a tool the Federal Reserve uses to influence the money supply in the economy and elaborate on how it is used to expand and contract the money supply. No numbers or calculations are required to answer this part. Was your chosen tool available before the 2008 financial crisis or introduced after it