Need help with this. I gave possible solutions(pick one) Thank you! 3. The money creation processSuppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. TheFederal Reserve buys a government bond worth $500,000 from Raphael, a customer of First Main Street Bank. He deposits the money into his checkingaccount at First Main Street Bank.Complete the following table to reflect any changes in First Main Street Bank's balance sheet (before the bank makes any new loans).AssetsBuilding and Furniture/CheckableDeposit/Loans/Net Worth/Reserves$50,000/$450,000/$500,000/$1,100,000(Dollars)500,000Liabilities.Building and Furniture/CheckableDeposit/Loans/Net Worth/ReservesHint: If the change is negative, be sure to enter the value as a negative number.Amount Deposited Change in Excess Reserves(Dollars)Complete the following table to show the effects of the new deposit on excess and required reserves, assuming a required reserve ratio of 10%.$50,000/$450,000/$500,000/$1,100,000Change in Required Reserves(Dollars) Now, suppose First Main Street Bank loans out all of its new excess reserves to Megan, who immediately writes a check for the full amount to Larry.Larry then immediately deposits the funds in his checking account at Second Republic Bank. Then Second Republic Bank lends out all of its new excessreserves to Alex, who writes a check to Susan, who deposits the money in her account at Third Fidelity Bank. Finally, Third Fidelity lends out all of its newexcess reserves to Becky.Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar.First Main Street BankSecond Republic BankThird Fidelity BankIncrease in Checkable Deposits Increase in Required Reserves Increase in Loans(Dollars)(Dollars)(Dollars)500,000Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under theseassumptions, the $500,000 injection into the money supply results in an overall increase ofin checkable deposits.$500,000/$4,500,000/$5,000,000

Assets - An asset is an increased value that a corporation or country owns and controls expecting a…

3. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. The Federal Reserve buys a government bond worth $500,000 from Raphael, a customer of First Main Street Bank. He deposits the money into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's balance sheet (before the bank makes any new loans). Assets Building and Furniture/Checkable Deposit/Loans/Net Worth/Reserves $50,000/$450,000/ $500,000/$1,100,000 Liabilities Building and Furniture/Checkable Deposit/Loans/Net Worth/Reserves $50,000/$450,000/ $500,000/$1,100,000 Complete the following table to show the effects of the new deposit on excess and required reserves, assuming a required reserve ratio of 10%. Hint: If the change is negative, be sure to enter the value as a negative number.

3. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. The Federal Reserve buys a government bond worth $500,000 from Raphael, a customer of First Main Street Bank. He deposits the money into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's balance sheet (before the bank makes any new loans). Assets Building and Furniture/Checkable Deposit/Loans/Net Worth/Reserves $50,000/$450,000/ $500,000/$1,100,000 Liabilities Building and Furniture/Checkable Deposit/Loans/Net Worth/Reserves $50,000/$450,000/ $500,000/$1,100,000 Complete the following table to show the effects of the new deposit on excess and required reserves, assuming a required reserve ratio of 10%. Hint: If the change is negative, be sure to enter the value as a negative number.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 3.4P

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7. The money creation process Suppose Southeast Mutual Bank, Walls Fergo Bank, and PJMorton Bank all have zero excess reserves. The required reserve ratio is presently set at 20%. Darnell, a Southeast Mutual Bank customer, deposits $1,500,000 into his checking account at the local branch. Complete the following table to reflect any changes in Southeast Mutual Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 20%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves (Dollars) (Dollars) 1,500,000 Change in Required Reserves (Dollar) Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Beth, who immediately uses the funds to write a check to Andrew. Andrew deposits the funds immediately into his checking account at Walls Fergo Bank. Then…
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The reguired reserve ratio is 5%. Lorenzo, a client of First Main Street Bank, deposits $200,000 into his checking account at First Main Street Bank. A- Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 5%. bonge Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves Change in Required Reserves (Dollars) (Dollars) (Dollars) 200,000 11:26 AM 4/3/2022 F8 F9 Insert Prt Sc F10 F11 F12 Fn Lock F1 /F3 F4 F5 F6 F7 Del F2 Esc #3 24 & %23 Backsp 1 6. 8. 9. %3D 2 4. 1 W F R
5. The money creation process Suppose Southeast Mutual Bank, Walls Fergo Bank, and PJMorton Bank all have zero excess reserves. The required reserve ratio is presently set at 5%. Musashi, a Southeast Mutual Bank customer, deposits $200,000 into his checking account at the local branch. Complete the following table to reflect any changes in Southeast Mutual Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 5%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves (Dollars) (Dollars) 200,000 Change in Required Reserves (Dollars) Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Kyoko, who immediately uses the funds to write a check to Jacques. Jacques deposits the funds immediately into his checking account at Walls Fergo Bank. Then…
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. Hubert, a client of First Main Street Bank, deposits $500,000 into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves Change in Required Reserves (Dollars) (Dollars) (Dollars) 500,000 Now, suppose First Main Street Bank loans out all of its new excess reserves to Eileen, who immediately uses the funds to write a check to Clancy. Clancy…
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 20%. Kenji, a client of First Main Street Bank, deposits $750,000 into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 20%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Required Reserves (Dollars) Change in Excess Reserves (Dollars) (Dollars) 750,000 Now, suppose First Main Street Bank loans out all of its new excess reserves to Ginny, who immediately uses the funds to write a check to Eric. Eric deposits the funds immediately into his checking account at Second Republic Bank. Then…
1.Name a reason why retail Money Market Mutual Funds are not included in M1 but demand deposits and other checkable deposits are. What specific role of money does this analysis (e.g. medium of exchange, standard of value, standard of deferred payments, store of value) pertain to? 2.Passbook savings accounts and NOW accounts (part of checkable deposits) are both interest bearing bank deposits, but NOW accounts have checkable privileges and passbook savings accounts have no checkable privileges. Then why would anyone have a passbook savings deposit? Provide the economic concept behind this argument 3.Choose an interest rate other than the 3 month Treasury Bill rate or the Federal Funds rate. Provide a definition for this interest rate. Now consider the website of the Federal Reserve Economic Database (FRED), given by http://research.stlouisfred.org/fred2/. Using this database, look up the series for monthly observations for this interest rate, and provide a graph of this…
Table 1 Balance Sheet Assets Liabilities Reserves $ 3,825 Deposit $17,000 Loans $13,175 Total Assets $17,000 Total Liabilities $17,000 ng Assume that this is the balance sheet of the only bank in this economy and that the money supply is entirely kept by the bank in either a checking or a savings account. Refer to Table 1. Assume that this is the balance sheet of the only banks in this economy: Given a reserve requirement of 7 percent, what is the maximum potential increase in the money supply in the economy? $37,642.9 O $34,000 O $36,400 O $30,812.5 O $46,750
7. The money creation process Suppose Southeast Mutual Bank, Walls Fergo Bank, and PJMorton Bank all have zero excess reserves. The required reserve ratio is presently set at 5%. Eric, a Southeast Mutual Bank customer, deposits $200,000 into his checking account at the local branch. Complete the following table to reflect any changes in Southeast Mutual Bank's T-account (before the bank makes any new loans). Building and furniture Liabilities Building and furniture Assets Deposits Deposits Loans Loans Net worth Reserves $10,000 $190,000 $200,000 $420,000 Net worth Reserves $10,000 $190,000 $200,000 $420,000
3. Refer to the T account of First National Bank First National Bank T Account Assets Liabilities Reserves $2,500 Deposits 10,000 Loans $7,500 Based on the table: Calculate the reserve ratio for this bank Calculate the money multiplier for this bank Assuming that this bank has a $500 excess reserve then how much money can be created with that amount?
Your bank has the following balance sheet: Assets Liabilities Checkable Reserves $90 million $380 million deposits $130 Securities million Loans $200 million Bank capital $40 million If the required reserve ratio is 20%, what will be the size of this bank (as measured by its total assets or liabilities) after $20 million deposit outflow if it just meets reserve deficiency by taking out a discount loan from the Federal Reserve? $402 million $400 million. OOOO $420 million. $412 million.