Follow instructions on balance sheet

 Balance Sheet for Ecoville International Bank

ASSETS

LIABILITIES

Cash

$33,000

Demand Deposits

$99,000

Loans

  66,000

Now assume that the Fed lowers the reserve requirement to 8%.

  1. What is the maximum amount of new loans that this bank can make?
  2. Assume that the bank makes these loans. What will the new balance sheet look like?
  3. By how much has the money supply increased or decreased?
  4. If the money multiplier is 5, how much money will ultimately be created by this event?
  5. If the Fed wanted to implement a contractionary monetary policy using reserve requirement, how would that work?

Need your ASSIGNMENT done? Use our paper writing service to score better and meet your deadline.


Click Here to Make an Order Click Here to Hire a Writer