The First Imperial Bank of Timmins Ontario has the following items on its ledgers: (All numbers in millions.)
Notice deposits: $6000
Consumer loans: $6000
Cash in vault: $400
Ontario Provincial Bonds: $2000
Demand deposits: $10000
Loans to businesses: $2000
Miscellaneous liabilities: $1000
Deposits with the Bank of Canada: $1600
Government of Canada Bonds: $4000
a.Place them on the appropriate side of the balance sheet. Compute the bank's net worth.
b.If the desired reserve ratio is 15 percent on demand deposits, and 0 percent on notice deposits, what are the bank's desired reserves? What are its excess reserves?
c.By how much can this bank increase its loans? Explain.

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The Answer of The First Imperial Bank of Timmins Ontario has the following items on its ledgers: (All numbers in millions.)
Notice deposits: $6000
Consumer loans: $6000
Cash in vault: $400
Ontario Provincial Bonds: $2000
Demand deposits: $10000
Loans to businesses: $2000
Miscellaneous liabilities: $1000
Deposits with the Bank of Canada: $1600
Government of Canada Bonds: $4000
a.Place them on the appropriate side of the balance sheet. Compute the bank's net worth.
b.If the desired reserve ratio is 15 percent on demand deposits, and 0 percent on notice deposits, what are the bank's desired reserves? What are its excess reserves?
c.By how much can this bank increase its loans? Explain.

The First Imperial Bank of Timmins Ontario Has the Following