1. Refer to a T-account that shows an initial reserve and deposit in a Chase Bank to answer the following questions.

Chase Bank

Assets ($1000) Liabilities ($1000)

Reserve $200 Deposit $200

1) Suppose that a depositor takes out $20,000 from his Chase Bank because he lost a job due to COVID19. Show how this transaction ultimately changes reserve and deposit in a separate T-account. (2 points)

2) Suppose that the Chase Bank keeps 10% of reserve as required reserve and lends out the rest of reserve as loans to another borrower. Show how this transaction ultimately changes a T-account in a separate T-account. (2 points)

3) Suppose that another borrower also deposits his loans to the same Chase Bank and the Chase Bank again keeps 10% of reserve as required reserve and lends out the rest of reserve as loans to another borrower. Show how this transaction ultimately changes a T-account in a separate T-account. (3 points)

4) Suppose that this process continues. How much is a simple deposit multiplier (money multiplier)? How much is the total decrease in money supply? How much is the deposit at the end of transaction? Show how to get those numbers. (3 points)