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Suppose that Big Bucks Bank has the simplified balance sheet shown below and that the reserve ratio is 20 percent:Instructions: All answers to this question should be entered as whole numbers.AssetsLiabilities and net worth(1)(2)(1′ )(2′ )Reserves$24,000 $ $Checkable deposits $ 100,000 $ $Securities38,000 $ $Loans38,000 $$a.What is the maximum amount of new loans that Big Bucks Bank can make? $Show in columns 1 and 1′ how the bank’s balance sheet will appear after the bank has lent this additional amount.b.By how much has the supply of money changed? $c.How will the bankâs balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against this bank? Show this new balance sheet in column 2 and 2′.d.Answer questions a, b, and c on the assumption that the reserve ratio is 15 percent.What is the maximum amount of new loans that this bank can make? $Show in column 3 and 3′ (below) how the bankâs balance sheet will appear after the bank has lent this additional amount.By how much has the supply of money changed? $AssetsLiabilities(3)(4)(3′ )(4′ )Reserves$24,000 $ $Checkable deposits $ 100,000 $ $Securities38,000 $$Loans38,000 $$How will the bankâs balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against this bank? Show this new balance sheet in column 4 and 4′ in the table above.
