5. The money creation processSuppose Southeast Mutual Bank, Walls Fergo Bank, and PJMorton Bank all have zero excess reserves. The required reserve ratio is presently set at5%. 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).AssetsLiabilitiesComplete 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)200,000Change 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 Walls Fergo Bank lends out all of its new excess reserves 5. The money creation processSuppose Southeast Mutual Bank, Walls Fergo Bank, and PJMorton Bank all have zero excess reserves. The required reserve ratio is presently set at5%. 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).AssetsLiabilitiesComplete 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)200,000Change 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 Walls Fergo Bank lends out all of its new excess reserves

The required reserve ratio of a bank depicts the minimum amount of deposits a bank must keep as…

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 (Dollars) 200,000 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 chan is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves (Dollars) Change in Required Reserves (Dollars)

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 (Dollars) 200,000 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 chan is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves (Dollars) Change in Required Reserves (Dollars)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Monetary System

Section: Chapter Questions

Problem 3PA

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Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 44Deposits 255Loans 155 Securities 51Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 6%(Give answers to 2 decimal places as needed)
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