Round A Deposits A Reserves A Loans 1st $10,000 $2,000 $8,000 2nd 3rd 4th Sth The first round has been completed in the table. Now, recalling that the new loans in the first round become the new deposits in the second round, complete the second round in the table. Then by using the same approach, complete the entire table. a. b. This deposit-creation process could go on forever, but it would still have a finite sum. The eventual total change in deposits is equal to 1/v times the new deposit, where v is the target reserve ratio. What is the eventual total change in deposits in this case? с. What is the eventual total change in reserves? What is the eventual change in loans?

Round A Deposits A Reserves A Loans 1st $10,000 $2,000 $8,000 2nd 3rd 4th Sth The first round has been completed in the table. Now, recalling that the new loans in the first round become the new deposits in the second round, complete the second round in the table. Then by using the same approach, complete the entire table. a. b. This deposit-creation process could go on forever, but it would still have a finite sum. The eventual total change in deposits is equal to 1/v times the new deposit, where v is the target reserve ratio. What is the eventual total change in deposits in this case? с. What is the eventual total change in reserves? What is the eventual change in loans?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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