Econ 202 - NelsonUnit 8 AssignmentName______RyanIngalls_________I.The Bank of Nelson (BON) is a bank in the United States, with $18,000 cash in its vault,and $46,000 on deposit at the Federal Reserve (the Fed). The customers of the bank haveon deposit $800,000 in checking accounts. The bank owns government securities worth$180,000 and has made loans totaling $600,000. The FED imposes a 8% required reserveratio on this bank.A.Put the assets and liabilities of the BONinto a balance sheet using the T-account atright.B.Calculate the bank’s2.C.By how much can this bank safely increase its loans? Explain!D.If the BON buys $10,000 of government securities from theFed,1.determine the immediate change in M1 and M2decrease them2.show the changesin the bank’s balance sheet3.calculate the amount by which the bank cansafely increase its loans4.calculate the maximum possible change in total deposits in the banking system
