Money Creation problem

You find $10,000 in cash under grandma's mattress that she has been holding onto for 25 years. You convince her that banks are now safe and she deposits the full amount into a First Bank checking account. Assume First bank holds no excess reserves, the reserve requirement is 8%, and borrowers hold no currency.

(Show assets and liabilities for each bank. Using a T Account is recommended, but not required. If you don't use T Accounts, you need to make sure you explain each answer in detail.)

1. Show the initial transaction and three additional steps in the deposit creation process.
2. Including the initial deposit, how much in deposits are created after these four transactions are completed?
3. How much do deposits and loans increase for the banking system when the expansion process continues to its completion?

Show your work (including formulas)! Explain in detail!

Money Creation problem You find $10,000 in cash under grandma's mattress that she has been holding onto for 25 years. You convince her that banks are now safe and she deposits the full amount into a First Bank checking account. Assume First bank holds no excess reserves, the reserve requirement is 8%, and borrowers hold no currency. (Show assets and liabilities for each bank. Using a T Account is recommended, but not required. If you don't use T Accounts, you need to make sure you explain each answer in detail.) 1. Show the initial transaction and three additional steps in the deposit creation process. 2. Including the initial deposit, how much in deposits are created after these four transactions are completed? 3. How much do deposits and loans increase for the banking system when the expansion process continues to its completion? Show your work (including formulas)! Explain in detail