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Money Creation Problem 1: Charlie Brown is digging around in his attic and finds $2,000 in an old trunk. He takes the money to his

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Money Creation Problem 1: Charlie Brown is digging around in his attic and finds $2,000 in an old trunk. He takes the money to his bank and deposits the $2,000 in his checking account. Explain the first four rounds of the deposit creation process if the required reserve ratio is 25 percent and if people keep no currency outside of the banking system. Show your calculations. Deposit Required Reserves Excess Reserves 1. 2. 3. 4. a. Based on your answers above, what is the total amount of loans that can be created from the $2,000 deposit? Problem 2: If Looney Tunes Bank receives an additional deposit of $50,000 and the required reserve ratio is 18 percent, what is the amount of new loans Looney Tunes Bank can make, Show any calculations

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