Question
1. In the hypothetical country of Westlandia, banks are required to hold 20% of checkable deposits as reserves. The public holds 50% of the loans
1. In the hypothetical country of Westlandia, banks are required to hold 20% of checkable deposits as reserves. The public holds 50% of the loans as currency in circulation and redeposits the remaining 50% percent of the loans.
a. Complete the table (calculations should be to no more than two decimal places).
| Round | Deposits | Required Reserves of 20% | Excess Reserves | New Loans | 50% of loan proceeds are held as currency in circulation by people | Loan proceeds redeposited |
|---|---|---|---|---|---|---|
| 1 | $500 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
| 2 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
| 3 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
| 4 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
| 5 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
| 6 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
| 7 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
| 8 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
| 9 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
| 10 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
| Totals | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
b. Calculate the new money supply.
(Enter your response here.)
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Managerial Accounting
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
13th Edition
978-0073379616, 73379611, 978-0697789938
