Assume that Empathy State Bank begins with this balance sheet and is fully loaned-up. Use the information given to answer the following questions. 
I. For this state bank, legal reserves are defined to be vault cash plus deposits at the Fed. What are this bank's reserves?
II. What is the value of the reserve requirement?
III. If the bank receives a new deposit of $5,000 and the bank wants to remain fully loaned-up, how much of this new deposit will the bank lend out?
IV. What is the potential money multiplier equal to?
V. When the new deposit to Empathy State Bank works itself through the entire banking system (assume all banks are fully loaned-up), how much new money may be created?
Definitions:
Straight Line
A method of calculating depreciation and amortization that evenly spreads the cost of an asset over its useful life.
Sale Price
The amount of money for which a product, asset, or service is sold in the marketplace.
Revaluation Model
An accounting method allowing for the increase or decrease of an asset's value on the balance sheet, based on current fair values.
Fair Value
The price at which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm's length transaction.
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