Suppose the reserve requirement is 10%, banks hold no excess reserves, and there are no additional currency holdings. Find the change in deposits, reserves, and loans for each bank in the following scenario.

a. Henry receives an $8,000 check from selling his car and deposits the check into Tennessee Bank. Use the table below to show the change in assets and liabilities at Tennessee Bank resulting from this transaction.

Change in Reserves: _____?______

Change in Loans: ______?_______

Change in Liabilities: ______?_______

b. Suppose that Julie gets a loan from Tennessee Bank in the amount from the "Loans" cell in the table in part a, and uses it to buy some tools from Todd. Todd deposits the money from Julie into Kentucky Bank. Use the table below to show the change in assets and liabilities at Kentucky Bank resulting from this transaction.

Change in Reserves: _____?______

Change in Loans: ______?_______

Change in Liabilities: ______?_______

c. Now suppose that Sue gets a loan from Kentucky Bank in the amount from the "Loans" cell in the table in part b, and buys some furniture from Jerry with the money. Jerry takes the money from the furniture and deposits it into Indiana Bank. Use the table below to show the change in assets and liabilities at Indiana Bank resulting from this transaction.

Change in Reserves: _____?______

Change in Loans: ______?_______

Change in Liabilities: ______?_______