What isthe max amount of new loans that this bank can make? How will appear on the balance sheet after the bank has lent this money? (show in column 1)
Explain how the supply of money changed?
How will the bank's bal sheet appear after checks drawn fortghe entire amount of the new loan have cleared. (show in column 2)
balance sheet:
Assets (1) (2) Liabiities & net worth
Reserves $22,000 Checkable deposits $100,000
securities $38,000
Loans $40,000
Im guessing that the balance sheet you presented is an initial starting point. Correct?? So, to answer the question, you need to present what changed. E.g., "an additional 1000 was deposited in person's checking account" Second, you need the reserve requirement (e.g, RR=22%).
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