(Answered) Use the following information for a banking system and

Engineering

Use the following information for a banking system and expand it to its limits (i. e., exhaust excess reserves). Prepare a new balance sheet and determine TR and RR after expansion.

1. Rd = 10%

2. Rt = 1%

3. The public wishes to hold $4 in time deposits for each $1 in demand deposits

4. The public wishes to hold $0.35 in currency for each $1 in demand deposits

5. The banking system will hold excess reserves of 1% on all demand deposits in excess of $1,000,0000, but none on the first $1,000,000.

ASSETS LIABILITIES

Cash $300,000 Demand Deposits $1,000,000

FR Acct 200,000 Time Deposits 4,000,000

Loans & Sec 4,500,000

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