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Suppose the Federal Reserve set the reserve requirement at 10%. Assume that banks lend all reserves that are not required to be held. Instructions: Round
Suppose the Federal Reserve set the reserve requirement at 10%. Assume that banks lend all reserves that are not required to be held. Instructions: Round your answers to two decimal places. a. Complete the table below based on this information. Fractional Reserve Banking Transaction Deposit Reserves Required to be Held Reserves to Lend Out Sean receives $500 in cash and deposits the funds into his checking account. $500.00 $ $ Sean's bank loans Maria all reserves that are not required to be held. Maria's bank loans Jackson all reserves that are not required to be held. Jackson's bank loans Paul all reserves that are not required to be held. Total Money Created by Transactions $ b. Suppose instead that the reserve requirement is 15%. Complete the table using the new reserve requirement. Fractional Reserve Banking Transaction Deposit Reserves Required to be Held Reserves to Lend Out Sean receives $500 in cash and deposits the funds into his checking account. $500.00 $ $ Sean's bank loans Maria all reserves that are not required to be held. Maria's bank loans Jackson all reserves that are not required to be held. Jackson's bank loans Paul all reserves that are not required to be held. Total Money Created by Transactions $ c. As the reserve requirement increases, the amount of money created (Click to select)
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