Assume that there are 2 chartered banks and their T-accounts are below. Suppose that there are currently deposits of $500,000 in Bank A. Mohit borrows $400,000 from Bank A for a housing deposit to Cheng-Li. Cheng-Li takes that deposit and puts it into his bank, which is Bank B. The required reserve ratio is 20% for banks. Assume that each bank will use the deposits to make loans and not save any for bank capital or bond purchases. You can use the following balance sheets, for Bank A and Bank B to help you answer the question: What are the deposits in Bank A after the initial reserves and loans are made by the bank? Bank A 's Balance Sheet Assets Liabilities Reserves: Demand Deposits: Loans: Bank B's Balance Sheet Assets Liabilities Reserves: Demand Deposits: Loans