The Commercial Banks in Fundland Have The Banks Hold No Excess Reserves

Essay

The commercial banks in Fundland have
$$\begin{array} { l l } \text { Reserves } & \$ 500 \text { million } \\\text { Loans } & \$ 3,500 \text { million } \\\text { Deposits } & \$ 4,000 \text { million } \\\text { Total assets } & \$ 5,000 \text { million }\end{array}$$
The banks hold no excess reserves.
a) Calculate the banks' desired reserve ratio.
b) An immigrant arrives in Fundland with $10 million,which she deposits in a bank.How much does the immigrant's bank lend initially?