By how much has the money supply increased

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Reference no: EM13244354

Assume that the Bank of Ecoville has the following balance sheetand the Fed has a 10% reserve requirement in place:

BALANCE SHEET FOR ECOVILLEINTERNATIONAL BANK
ASSETS
LIABILITIES
Cash $33,000 Demand deposits $99,000
Loans $66,000
Now assume that the Fed lowers the reserve requirement to8%.

What is the maximum amount of new loans that this bank canmake?
Assume that the bank makes these loans. What will the new balance sheet look like?
By how much has the money supply increased ordecreased?

Reference no: EM13244354

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