Below is an extract of information from the balance sheet of a commercial Dank. ASSETS LIABILITIES Reserves 250 Deposits 1750 Loans 1500 The required reserve ratio is 20 percent. (a) How much is the bank required to hold as reserves? (5 Marks) hi (b) Calculate the bank excess reserves. (5 Marks) (c) By how much can the bank increase its loans? (5 Marks) (d) Suppose a depositor comes to the bank and withdraws Ksh. 100 in cash i. Show the bank's new balance sheet, assuming the bank obtai cash by drawing down its reserves. (3 Marks) II. Does the bank now hold excess reserves? (1 Mark) iii. Is the bank meeting the required reserve ratio?
