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| Suppose that FirstBank has the following simplified balance sheet. Assume that all other components of the balance sheet are equal to zero. 33 Assets
| Suppose that FirstBank has the following simplified balance sheet. Assume that all other components of the balance sheet are equal to zero. 33 Assets Liabilities reserves 3,920 demand deposits 32,000 loans 28,080 32,000 32.000 Assume that the reserve ratio is r= 10 (10%). a. Does FirstBank have excess reserves? If so, of how much? b. Suppose that FirstBank desires to hold no excess reserves, so it loans out its excess reserves to borrowers. How does the balance sheet change? Either use T-accounts or a new balance sheet to show. c. Starting back in a), what is the maximum deposit outflow that FirstBank can sustain without affecting other parts of the balance sheet
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