Question 3 (3 points)

Assets (million $)		Liabilities (million $)
Cash (reserves)	100	Deposits	100
Loans	0
Total	100	Total	100

(1 point) If the bank had a required reserve ratio of 10%. And that redeposit took place, how much loans could it issue? Provide the final Asset and Liability table for this bank.

(1 point) What would the new balance sheet (found in a) ) look like if 100$ in loans were to not be repaid? Would the bank need be considered insolvent? Explain.

(1 point) how much money is there in the economy in a) ? (what is the money supply?)