Question: Banking Question 2 Please use the balance sheet for Bank Alpha to answer the questions.Assume Bank Alpha loans all of its excess reserves, and the

Banking Question 2

Please use the balance sheet for Bank Alpha to answer the questions.Assume Bank Alpha loans all of its excess reserves, and the assets and liabilities balance on the balance sheet. Show all work.

Bank Alpha

AssetsLiabilities

Required ReservesXChecking Deposits$5,000.00

Loans$27,000.00Saving Deposits$25,000.00

a)How much is X, the dollar amount of reserves?

b)How much is the required reserve ratio? How much is the M_m?

c)Assume Bank Alpha loans its excess reserves to Bank Beta.Next Bank Beta loans their excess reserves to Bank Gamma.Please create balance sheets for Banks Beta and Gamma. Assume there are no excess reserves in this banking system.

d)How much total money stock created in this banking system?

e)What is the total of M1 for Bank Alpha? M2?

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