Assume that the Bank of Ecoville has the following balance sheet and the Fed has a 10% reserve requirement in place:
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%.
What is the maximum amount of new loans that this bank can make?
Assume that the bank makes these loans. What will the new balance sheet look like?
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Assume that the Bank of Ecoville has the following balance sheet and the Fed has a 10% reserve requi...
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