DD = $10,000, RR = $2000, ER = 0, Loans = $8000, Bonds = $7000

Assume that the Fed buys $5000 worth of bond from the bank.

A. What is the RR % for this bank?

B. What is the initial amount the bank can lend out based on this action?

C. What is the initial change in the DD account for the bank?

D. What is the TOTAL change in the DDs of the banking system?

E. What is the TOTAL change in the Money Supply of the US?

2.DD = $100,000, RR = $10,000, ER = $10,000, Loans = $80,000

Assume a citizen WITHDRAWS $ 10,000 from their account.

A. What is the RR % for this bank?

B. What is the new DD amount?

C. After the DD changes, what are the new RR and ER amounts going to become?

D. Which change in the TOTAL Money Supply will be greater:the person withdraws the money or the person leaves the money in the bank?Explain

3.DD = $100,000, RR = $20,000, ER $0, Loans =????

Assume that the Fed announces that the RR will be cut in half by % rate.

A.What should the initial Loan amount be?

B.What is the initial change in the RR amount for this bank?

C.What is the initial amount the bank can lend out?

D.What is the TOTAL change in Demand Deposits for the banking system?

E.What is the TOTAL change in the Money Supply of the US?

4.DD = $20,000, Equity = $5000, Reserves = $5,000, Business Loans = $10,000, Student Loans = $8,000,

Government Securities = $2,000.Assume a 10 percent reserve requirement.

A.Calculate the bank's required reserves.

B.Calculate the maximum amount of additional loans the bank can make without selling its government

securities.

C.Assume all banks lend out all excess reserves.Calculate the change in demand deposits in the banking

system.

D.Calculate the change in Total Reserves in the banking system.

E.Suppose that the country's central bank purchases $1,000 of the bank's securities as part of OMO.

What is the change in the bank's RR?Explain