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What is the relationship between the reserve requirement ratio and the money supply mulitplier? 2. Suppose the First National Bank has the following balance sheet:
What is the relationship between the reserve requirement ratio and the money supply mulitplier? 2. Suppose the First National Bank has the following balance sheet: Assets Liabilities Total Reserves $1,500 Checkable Deposits $30,000 Loans $21, 500 Net Worth $1,000 Government Securities $8,000 a. If the required reserve ratio is 5 percent, determine the bank's required and excess reserves. Show your work Given this balance sheet, what is the maximum amount this bank could loan out? 95 Suppose that a new cash deposit of $100,000 is made at First National into a customer's checking account. Now, by what amount can First National increase its loans? What is the maximum amount of new deposit expansion in the banking system (i.e., what is the maximum amount of "new" money created by this deposit expansion process)? 3. Suppose your mother gives you $5,000 she has had buried in a can in her backyard and you deposit it into your checking account at your bank. If the reserve requirement is 10%, what is the maximum increase in the amount of "new" money created by the banking system? Now suppose the reserve requirement is 20%. What happens to the amount of new money created by the banking system
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