Problem 2: Balance Sheets & The Money Supply [7 Points] Suppose that the commercial bank reserve ratio is currently 20%. A bank begins with $2,000 of capital, and receives $20,000 in deposits. 10. Fill in the following table for the above bank? [2 points] Assets (5) Liabilities (%) Reserves Deposits Loans Capital Total Total Now suppose that $20,000 is the initial deposit into this banking system. Assume going forward that capital is equal to zero. Assume also that there is $50,000 of cash in the economy. The bank reserve ratio remains 20%. Cash drain is 0%. 11. How much deposits are generated across the entire banking system as a result of this initial $20,000 deposit? [2 points] 12. What is the total Money Supply in this economy? [1 point] Now suppose that the Government financial regulator drops the reserve requirements from 20% to 10%. 13. What is the change in the Money Supply as a result of this change in the reserve requirements? [2 points]