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Table 1 shows the financial position of the Smithville Bank once $4895.00 has been deposited. Assume that the required reserve ratio is 5.00%. The bank manager decides to lend Billy Bob Smith all of the bank's excess reserves. Billy Bob takes the funds to Eula Mae's Used Machines and buys a pickup truck. Eula Mae then deposits the money in her account back at the Smithville Bank. Table 2 should show the bank's accounts after the loan is made and the funds again deposited.
Table 1: Original Assets and Liabilities
Assets Liabilities
Reserves: $4895.00 Deposits: $4895.00
Table 2: Original Assets and Liabilities after Bank Makes a Loan
Assets Liabilities
Reserves:? Deposits: ?
Loans" ?
1. What are the bank's loans in Table 2?
2. What are the bank's reserves in Table 2?
3. What are the bank's deposi

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Based on the details given in the table, the following are true of the Smithville Bank:

  • Bank loans are $4,650.25.
  • Bank reserves are $4,895
  • Bank deposits are $9,545.25.

What are the bank loans?

These can be found as:

= Amount deposited x ( 1 - required reserves)

= 4,895 x (1 - 5%)

= $4,650.25

What the bank's reserves?

The bank's reserves are the same as the new deposits without the reserve requirement being taken.

This leaves it as the amount that was deposited of $4,895.

What are the bank's deposits?

This is found as:

= Initial deposit + Loan created

= 4,895 + 4,650.25

= $9,545.25

Find out more on bank reserves at https://brainly.com/question/4095223.