Question 4 - CLO#1 - 6 marks Solve te below Problems: 1 Consider a bank has the following balance sheet (in million of $): (2 marks) Assets Liabilities and Net worth Reserves $75 Demand Deposits $500 Loans 525 Net worth 100 If the bank suffers a deposit outflow of $50, with a reserve ratio requirement of 10%, what actions must the bank take to avoid violating its reserve requirements? 2- Consider a bank that as the following balance sheet: (4 marks) Aseets Liabilities and Net worth Reserves $100 Demand Deposits $1,000 Loans 1,000 Net worth 100 A new customer opens a checking account and deposits $500 into it. For each of the following questions, assume the required reserve ratio is 10%. a- After the new deposit, how much money can this bank lend? b- Assuming that the bank makes the largest loan possible, borrowers choose not to hold excess cash, and banks choose not to hold excess reserves, how many total new deposits can be created as a result of the initial $500 deposit