Suppose the reserve requirement is 8% and a new deposit of $900 billion is made into the banking system. Create T accounts to analyze the following questions. a) Initially, reserves would increase by? b) Required reserves would increase by? c) Excess reserves would increase by?
Suppose the reserve requirement is 8% and a new deposit of $900 billion is made into the banking system.
Create T accounts to analyze the following questions.
a) Initially, reserves would increase by?
b)
c)
d) The first round of loans would amount to?
e) The second round of loans would amount to approximately?
f) The third round of loans would amount to approximately?
g) For the entire macroeconomy, after the infinite rounds of loans were taken into account, money supply would increase by?
h) If the Federal Reserve bought bonds worth $600 billion, money supply would increase by?
i) If the Federal Reserve sold bonds worth $600 billion, money supply would decrease by?
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What would the second and third round of loans increase by?
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