The money creation process

ippose Southeast Mutual Bank, Wals Fengo Benk, and PMorton Bank all heve zero excess reseves. The required reserve ratio is presenty set at $1095.$ Tim, a Southeast Mutual Bank customer, dequsits $$1,500,000$ irto his dhecking account at the local trandh.

Complete the bollowing table to reflect any charges in Southeast.Mutuel Banks T$-$account $($before bhe benk makes any new laans$).$

Assets

Liabilities

Complete the following table to show the elled or a new deposit an excess and required neserves when the required reserve ratio is $20\%.$

Hint: Ir the change is regative, be sure to erter the value as negatwe number:

Amount Deposited

$($Dollars$)$

$1,500,000$

$1,500,000$

Now, suppose Southeast Mutual Bark loans out all of its new excese neserves to Roa, whe immediately uses the funds to write a check to Nick. Nick deposits the hunds lommediately into his checking acoount at Walls Fergo Bank. Then Walls Forgo Bank lends out all of its nevi evcess reserves to Brian, in tum.

FWi in the following lable to show the effect of the ongoing chain of events at each barik. Enter each ariswer to the nearest dovar.

Asoume this process continues, with each successive ban deposited ints a cheoking account and no banks keeping any excess regerve. Under these assumptions, the $$1,500,000$ injection into the maney supply results in an overall increase of $$ in denarid deposits.