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Please help with the answers to part (C) and part (D) only. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Question 4 (10pt): A&B Bank has $10,000 in deposits. We assume that

Please help with the answers to part (C) and part (D) only.

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Question 4 (10pt): A&B Bank has $10,000 in deposits. We assume that the bank choose to keep total reserves exactly equal to the required reserves. It means that banks do not want to hold any excess reserves. Also, we assume that whenever a person gets cash, the individual redeposits the entire amount in her checking account instead of keeping the money as cash. 6.25 (2pt) a. If the reserve ratio is 10%, how much of these deposits must the bank hold in reserve? How much in loans can possible A&B bank issue in the given situation? Construct the T-account for A&B bank. assets liabilities reserve 10000 deposit loan 1000 9000 (1pt) b. What must be true of the total values on each side of the T-account? (3pt) c. Suppose A&B bank loan out all the excess reserves to Britt. Britt who borrows money from A&B bank repays her debt sending the amount to an account of her friend, Zach. Zach's bank, C&D bank wants to loan out all the excess reserves to another borrower, Madi, who keeps her money in her bank account. Construct the T-account for C&D Bank. -0.95 assets liabilities 27,000 27,000 it increases based on loans supplie (2pt) d. What is the total amount of bank deposit? (or what is the total amount of money supply?) Explain your answer. OF 27,000 because by banks, determined by required reserves. (2pt) e. The process continues and additional money is created with each new loan until there is no sufficient reserves to make loans. In this deposits-only monetary system with a 10% reserve ratio, a bank (initial) deposit was $10,000. What is the total amount of money supply including the initial amount after all the process of money creation? $ 100,000

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