The balance sheet below shows the effect of a new 1,200 deposit in Bank A. Assume that the commercial banks have established a 8 percent desired reserve and that no bank holds excess reserves. BANK A Assets Liabilities Reserves 1,200 Deposits 1,200 Loans 0 Assume that Bank A lends its excess reserves to Mr. Jones who spends the proceeds of the loan. Show Bank A's new balance sheet Assets BANK A Reserves Deposits Loans The money Mr. Jones borrows is deposited in Bank B. Bank B lends its excess reserves to Mr. Smith. Show Bank B's balance sheet after the loan has been made out. The money Mr. Smith borrows is deposited in Bank C. Bank C lends its excess reserves to Mr. Black. Show Bank C's balance sheet after the loan has been made out. The money Mr. Black borrows is deposited in Bank D. Bank D lends its excess reserves to Mr. Green. Show Bank D's balance sheet after the loan has been made out. The money Mr. Black borrows is deposited in Bank D. Bank D lends its excess reserves to Mr. Green. Show Bank D's balance sheet after the loan has been made out. If the above process continues to completion, the following totals will exist for the banking system: Part 7: Deposits Part 8: Reserves Part 9: Loans The balance sheet below shows the effect of a new 1,200 deposit in Bank A. Assume that the commercial banks have established a 8 percent desired reserve and that no bank holds excess reserves. BANK A Assets Liabilities Reserves 1,200 Deposits 1,200 Loans 0 Assume that Bank A lends its excess reserves to Mr. Jones who spends the proceeds of the loan. Show Bank A's new balance sheet Assets BANK A Reserves Deposits Loans The money Mr. Jones borrows is deposited in Bank B. Bank B lends its excess reserves to Mr. Smith. Show Bank B's balance sheet after the loan has been made out. The money Mr. Smith borrows is deposited in Bank C. Bank C lends its excess reserves to Mr. Black. Show Bank C's balance sheet after the loan has been made out. The money Mr. Black borrows is deposited in Bank D. Bank D lends its excess reserves to Mr. Green. Show Bank D's balance sheet after the loan has been made out. The money Mr. Black borrows is deposited in Bank D. Bank D lends its excess reserves to Mr. Green. Show Bank D's balance sheet after the loan has been made out. If the above process continues to completion, the following totals will exist for the banking system: Part 7: Deposits Part 8: Reserves Part 9: Loans