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The table below is the balance sheet for all the banks combined in the banking system. Assets Liabilities/Equity Reserves 3; 110,000 Demand deposits $ 1,100,000
The table below is the balance sheet for all the banks combined in the banking system. Assets Liabilities/Equity Reserves 3; 110,000 Demand deposits $ 1,100,000 Shareholders' 110,000 Loans 990,000 . eqUIty Securities 66,000 Fixed assets 44,000 Total $1,210,000 Total $1,210,000 a. If all banks maintain 10% reserves, what happens to the money supply if $460 cash is deposited into one of the banks in the system? b. Southland Bank has $10,000 in excess reserves and $25,000 in actual reserves, if the target reserve ratio is 10%, what are the values of demand deposit and outstanding loans? Assume that the bank has no other assets or liabilities
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