3) Use the following bank balance sheet to answer the question below:
Assets
Liabilities
Total Reserves: $15,000 Demand Deposits: $100,000
Securities:
70,000
Loan:
15,000
a) If the reserve requirement is 12 percent and the bank does not sell any of its securities, the
maximum amount of additional lending this bank can undertake is
b) If the bank loans the full amount from the previous question, what will be the maximum amount
that the money supply will expand by?
