Suppose the simplified consolidated balance sheet shown belowis for the entire commercial banking system and that all figures are in billions of dollars. The reserve ratio is 10 percent.

Instructions: All answers to this question should be entered as whole numbers.

Assets	Liabilities and net worth
1	(a)	(b)	1'	(a)	(b)
Reserves	$62	$	$	Checkable deposits	$200	$	$
Securities	38	$	$
Loans	100	$	$

a.What is the amount of excess reserves in this commercial banking system?$billion

What is the maximum amount the banking system might lend? $billion

Show in columns 1(a) and 1'(a) how the consolidated balance sheet would look after this amount has been lent.

What is the size of the monetary multiplier?

b.Answer the questions in part a assuming the reserve ratio is 5 percent.

What is the amount of excess reserves in this commercial banking system? $billion

What is the maximum amount the banking system might lend? $billion

Show in columns 1(b) and 1'(b) how the consolidated balance sheet would look after this amount has been lent.

What is the monetary multiplier?