Suppose the Second National Bank Has the Following Simplified Balance

question 11

Essay

Suppose the Second National Bank has the following simplified balance sheet.The reserve ratio is 25% and all dollar figures are in thousands. Assume that households and businesses deposit $10 in this bank and that this currency is added to the bank's reserves.(a) In column (1) show the bank's balance sheet after this occurs.Is there a change in the money supply?
(b) In column (2) show what would happen if the bank now loans all of its excess reserves to a depositor.Is there a change in the money supply?

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Definitions:

Areolae

The pigmented areas surrounding the nipples of the breast, which can vary in size, color, and texture among individuals.

Labia Majora

The outer folds of skin surrounding the vulva in females, serving protective and sexual functions.

Sexual Excitement

The physiological and emotional state of arousal and anticipation that precedes sexual activity, characterized by increased heart rate, blood flow, and libido.

Hardening

The process of becoming firm or rigid; in a medical context, it can refer to the calcification or other physical changes in tissues or vessels.