The following table shows a simplified consolidated balance sheet for the banking system (all figures are in billions). The required reserve ratio is 25%

Assets

Liabilities &Equity

Reserves240

Fixed Assets260

Loans 500

Checkable Deposits1,000

A. What is the amount of excess reserves in this banking system?

B. Calculate the money multiplier? Interpret its meaning

C. What is the maximum amount the banking system might lend?

D. Show how the balance sheet would look after this amount has been lent (construct new balance sheet).