Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can you help me on c part 1 and 2c part 2 as well as d, e, and f? C 2c part 1 question does

image text in transcribed

Can you help me on c part 1 and 2c part 2 as well as d, e, and f? C 2c part 1 question does need you to include the loan info in question b deposits in Bank Z. Thank you!!!

image text in transcribed
b. Suppose that Bank Y makes the maximum loan they can from the funds you deposited in part a above. Use a T-account to show the initial effect (meaning only what happens at the moment of the loan creation) on Bank Y's balance sheet from granting the loan. You'll be showing the change to both sides of the T-Account table, not a total amount. Table 2b: Bank Y's T-Account (loan creation) Assets Liabilities Reserves: +$1,500 Deposits: + 10,000 Loans: +8,500 This is because the required reserve ratio is 15%, so Bank Y is required to hold 15% of the deposit as reserves, which is $1,500. The remaining amount of the deposit, $8,500, can be lent out as loans, LO9 Concept Test c. Now suppose that whoever took out the loan in question (b) deposits it in Bank Z. Show the effect of these transactions on the balance sheet of Bank Y and Bank Z. You'll be showing the change to both sides, not a total amount. Table 2c (part 1): Bank Y's T-Account Assets Liabilities Reserves: Deposits: Loans: Table 2c (part 2): Bank Z's T-Account Assets Liabilities Reserves: Deposits: Loans: 1 What is the maximum increase in checking account deposits that can result from your $10,000 deposit? What two assumptions need to hold to hit the maximum increase in checking account deposits? f Is this the same as the increase in money supply? Why or why not

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Economics And Strategy

Authors: Jeffrey M. Perloff, James A. Brander

3rd Edition

0134899709, 978-0134899701

More Books

Students also viewed these Economics questions

Question

Always show respect for the other person or persons.

Answered: 1 week ago