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Consider a new deposit to the Canadian banking system of $1000. Suppose all commercial banks have a target reserve ratio of 10 percent and there
Consider a new deposit to the Canadian banking system of $1000. Suppose all commercial banks have a target reserve ratio of 10 percent and there is no cash drain. The following table shows how deposits, reserves, and loans change as the new deposit permits banks to create money. Round A Deposits A Reserves A Loans First $1000 $100 $900 Second Third Fourth Fifth a. Complete the table for rounds second to fifth. b. What is the total change in deposits in the first five rounds as a result of the single new deposit of $1000? c. What is the eventual total change in deposits? d. What is the eventual total change in reserves? e. What is the eventual total change in loans
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