Question: I only need the answer to c below. 2. Refer to the simplified balance sheet for a bank and answer the following questions. Assets Liabilities

I only need the answer to "c" below.

2. Refer to the simplified balance sheet for a bank and answer the following questions.

Assets Liabilities
Reserves $10,000 Deposits $70,000
Loans $66,000 Stockholder's equity $6,000

  1. If the required reserve ratio is 5%, how much in excess reserves does this bank hold? Show your work.
  2. The Formula for the Reserve Ratio is:

Reserve requirement = Deposits * Reserve Ratio (What Is the Reserve Ratio, and How Is It Calculated?, 2022)

Reserve requirement = 70,000 * 5%

= $3500

  1. What is the maximum amount this bank can expand on its loans? Show your work.

Maximum loan expansion = (deposits - loans) - reserve requirement

= (70000 - 66000) - 3500

= 4000-3500

= 500

  1. What will happen to the M1 money supply if it makes the loans under (b) above and those funds are deposited into another bank by the borrowers?

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