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7. The money creation process Suppose Southeast Mutual Bank, Walls Fergo Bank, and PaMorton Bank all have zero excess reserves. The required reserve ratio is

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7. The money creation process Suppose Southeast Mutual Bank, Walls Fergo Bank, and PaMorton Bank all have zero excess reserves. The required reserve ratio is presently set at 20\%. Sam, a Southeast Mutual Bank customer, deposits $1,500,000 into his checking account at the local branch. Complete the following table to reflect any changes in Southeast Mutuw Bank's T-account (before the bank makes any new loans). Complete the following table to show the effoct of a new deposit on excess and required reserves when the required reserve ratio is 20%. Hint: If the change is negative, be sure to enter the value as negative number. Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Neha, who immediately uses the funds to write a check to Lorenzo. Lorenzo deposits the funds immediately into his checking account at Walls Fergo Bank. Then Walls Fergo Bank lends out all of its new excess reserves to Andrew, who writes a check to Teresa, who deposits the money into ber account at PJMorton Bank. PJMorton lends out all of its new excess reserves to Beth in turn. Fil in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar. Assume this process continues, with each successive loan deposited into o checking account and no banks keeping any excess reserves. Under these assumptions, the $1,500,000 injection into the money supply results in an overali increase of in demand deposits

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