The balance sheet below shows the effect of a new 1,800 deposit in Bank A. Assume that the commercial banks have established a 13 percent desired reserve and that no bank holds excess reserves.

Bank A

Reserves: 1800 Deposits: 1800

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

BANK A

Assets

Liabilities

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.

BANK B

Assets

Liabilities

Reserves____________

Deposits____________

Loans____________

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.

BANK C

Assets

Liabilities

Reserves____________

Deposits____________

Loans____________

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.

BANK D

Assets

Liabilities

Reserves____________

Deposits____________

Loans____________

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 money Mr. Black borrows is deposited in Bank D. Bank D lends its excess reserves to Mr. Green. Show Bank D's balance sheet alter the loan has been made out. BM D Assets liabilities Resumes Deposits If the above process eontim1es to completion; the 0110an totals will exist for the banking system: Part T: Deposits T Part 8: Reserves Part 9: Loans Queellon 13: (15 points) The balance sheet belov.r shows the effect of a new 1,800 deposit in Bank A. Assume that the commercial banks have established a 13 percent desired reserve and that no bank holds excess reserves. BANKA Asset Liabilities Reserves 1,800 Deposits 1.300 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 7 T BANK A Asset Liabilities 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 aerthe loan has been made out. BANK B Asset Liabilities Reserves Deposits Loans 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 aerthe loan has been made out. BANK C Asset Liabilities Reserves Deposits Loans 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 alter the loan has been made out. BANK D Asset Liabilities Reserves Deposit Loans If the above process continues to completion, the following totals will exist for the banking system