Suppose the balance sheet of Trust Bank (a commercial bank), contains the following items.

Stock shares, $300,000; Reserves, $60,000; Property, $290,000; Checkable deposits, $150,000; Securities, $40,000; Loans, $60,000

Note: The reserve requirement ratio = 20%

3.1Larry, who is a depositor at this bank, is now applying a loan worth $10,000 and his application is approved. Show the adjustments; and the latest status of the commercial bank's balance sheet and its lending ability, after this transaction takes place.

3.2Larry now is ready to make loan repayment in full. Show the adjustments; and the latest status of the commercial bank's balance sheet and its lending ability, after this transaction takes place.

3.3Hannah; who is also the depositor at the current commercial bank, buys a product that worth $3,000 and makes the payment through check to the seller, whom later deposit the check into his account at a different bank than Hannah. Show the adjustments; and the latest status of the commercial bank's balance sheet and its lending ability, after this transaction takes place.

3.4The central bank sells government securities to the current commercial bank worth $100,000. Show the adjustments; and the latest status of the commercial bank's balance sheet and its lending ability, after this transaction takes place.

3.5The central bank buys government securities from the current commercial bank worth $100,000. Show the adjustments; and the latest status of the commercial bank's balance sheet and its lending ability, after this transaction takes place.

3.6Suppose this bank's initial reserve is $1000. Assuming the money deposited is borrowed over and over again, without any leakage throughout the process, calculate

i.Maximum amount of money expansion

ii.Maximum amount of new money creation