Economics Question

Assets	Liabilities
Total Reserves	$50,000	Demand Deposits	$180,000
U.S. Government Bonds	$110,000
Loans	$20,000

Assume the balance sheet above is for Eastlandia National Bank. The reserve requirement is 20%.

a. Given the current situation, how much money can Eastlandia National Bank lend to borrowers if it wants to keep all of its bonds?

b. Based on your answer in part (a), how much additional money can Eastlandia National Bank create? (Remember, how means how and why.)

c. Explain two reasons why the money supply may not increase by the amount you identified in part (b).