Please answer the next 5 questions based on the following partial balance sheet for the 1st National Bank of Anywhere.

            Assets                                 Liabilities___________

Cash                  200,000                  DD     2,000,000                   XR = 20,000

Dep at Fed        120,000   

Treasury Bills       80,000

1. This bank has RR in the amount of _____ dollars.

2. The rr for this bank is equal to _____.

3. This bank can safely expand its loan portfolio by _______ dollars.

4. Suppose all other banks in the system are “fully loaned up” and they face the same reserve ratio. The maximum potential increase in the money supply is._____

5. If the Fed were to change the rr to 10% for this bank then

a. this bank would have a deficiency in its reserves.

b. could expand its loan portfolio by an additional 100,000.

c. would need to sell some of its T-bills to raise reserves.

d. could expand its loan portfolio by 120,000.

e. none of the above are correct.