Question: how do i calculate the t account? 15. This exercise is on the multiple contraction of the money supply resulting om Open Market Sales of

how do i calculate the t account?

15. This exercise is on the multiple contraction of the money supply resulting om Open Market Sales of securities by the Bank of England. Assume (i) the reserve requirement of commercial banks is 10% (ii) all commercial banks hold no excess reserves. Suppose the Bank of England sells two 12,000 bonds, one to Alex and one to Bart. Alex pays for his bond with money he withdraws from his account at the North Star Bank. Bart pays for his bond with money he stored under his mattress. a. Complete North Star Bank's balance sheet PRIOR to Alex's withdrawal. North Star Bank: Balance Sheet Assets Liabilities Reserves ?? Demand Deposits Loans ?? of Alex 15,000 Securities 22,000 of others 132,000 Total '3? Total '3? b. Show the impact of Alex's withdrawal. North Star Bank: Balance Sheet Assets Liabilities Reserves ?? Demand Deposits Loans ?? of Alex '3? Securities ?? of others ?? Total ?? Total '3? c. By how much do North Star Bank's reserves fall short of the legal requirement

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