Under a fractional reserve system, banks keep a percentage of deposits as reserves and lend the rest out

a) suppose that banks hold five percent of deposits as cash reserves and that the public holds no cash (all money is held as bank deposits). Show, using T-accounts for the banking sector, the effect of a $100 deposit. Be sure to show the mechanics of the system and the final balances for i)deposits, ii) cash reserves and iii) loans

b) suppose that the banks make poor loan decisions and have to write off $10 in loans. Explain the implications for the banking system. Use T-accounts or similar to illustrate your answer.