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For each of the following transactions, construct T-account(s) to illustrate the change(s) to bank balance sheets. a) Midwest Bank receives a $10,000 deposit. Banking regulations
For each of the following transactions, construct T-account(s) to illustrate the change(s) to bank balance sheets.
a) Midwest Bank receives a $10,000 deposit. Banking regulations require banks to hold 10% of the checkable deposits as reserves. Midwest Bank uses part of its excess reserves to make a loan worth $5,000.
b) You deposit $1,000 cash into your checking account at Bank of America. Banking regulations require banks to hold 9% of the checkable deposits as reserves.
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