Question 1 (12.5 marks) Super Bank operates with reserves of $400, loans of $1,600 and investment in government bonds of $500. The bank has taken in deposits of $2, 100 and has no other debts. (a) Prepare the balance sheet for Super Bank. (3 marks) (b ) What is the current leverage ratio of Super Bank? And if 7.5% of the loans have been proven to be a bad debt loss, illustrate how this leverage ratio amplifies the loss to the bank capital. (3 marks) (c) Suppose that the central bank requires banks to hold 15% of deposits as reserve. How much in excess reserve is with Super Bank? And if Super Bank now decides to reduce its reserves to the required amount only, by how much (at most) would the economy's money supply increase? (2 marks) (d) Suppose that the central bank buys back the government bonds from Super Bank for $300 million. For this action alone, what would be the maximum potential impact to the economy's money supply if all banks keep the reserve ratio of 15% and households keep no currency? (1.5 marks) (e) Identify three other methods that the central bank could use to increase money supply, except the open market operations (OMO) mentioned in part (d)