HOMEWORK 6(20 points)THIS ASSIGNMENT IS DUE ON MONDAY, NOVEMBER 8Write your answers in the spaces provided. (Make sure you read and understand the policiesregarding homework assignments)NAME___________________________________________Total Points = 20.1. Suppose that Bank A reports the following information on its Balance Sheet for Monday, April 12. Assume that the Fed has set the required reserve ratio at 5% (.05).Vault Cash $10,000Reserve Account at the Fed $15,000 Use to answer question 1 only.Checkable Deposits $800,000How many new loans can Bank A make on April 12? SHOW ALL CALCULATIONS AND EXPLAIN YOUR REASONING. (6 points)2. a. This question is separate from question 1. Suppose that the banking SYSTEM has $100 million in checkable deposits and $25 million in actual reserves. Suppose that the required reserve ratio is 25% (.25). Calculate the banking SYSTEM’S excess reserves. (3 points)b. Suppose the banking SYSTEM’S actual reserves decrease from $25 million (in part a) to $20 million. Assume everything else is the same as in part a. Calculate the change in the money supply? Show work.. (5 points)23. a. Explain clearly how the Fed could use Open Market Operations to decrease the banking system’s excess reserves. (3 points)b. Indicate the effect that a decrease in excess reserves will have on interest rates by using the diagram below. Label any changes in the diagram clearly and give a brief explanation of your reasoning. (3 points)Interest rate (i) S A i1 D L1Loans