Suppose that in a country the total holdings of banks were as follows:        required reserves = $45 million       excess reserves = $15 million       deposits = $750 million       loans = $600 million      Treasury bonds = $90 million     a

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Suppose that in a country the total holdings of banks were as follows:
       required reserves = $45 million
      excess reserves = $15 million
      deposits = $750 million
      loans = $600 million
     Treasury bonds = $90 million

    a. Show that the balance sheet balances if these are the only assets and liabilities.

b. Assuming that people hold no currency, what happens to each of these values if the central bank changes the reserve requirement ratio to 2%, banks still want to hold the same percentage of excess reserves, and banks don’t change their holdings of Treasury bonds? How much does the money supply change by?