2. On your mother's birthday, you bought her a new iPhone from Best Buy. Assume that you mad your purchase by writing a check for $900, and the store promptly deposited your check in its bank. i. Using T-accounts, show the effect of this transaction on your bank and on the Best Buy's bank (after your check is processed and cleared by the Federal Reserve). ii. What happens to your bank's reserves? What happens to the reserves of Best Buy's bank? iii.Assuming the reserve requirement is 10 percent and your bank was holding no excess reserves initially, what is the level of excess reserves in your bank after the transaction? iv.List two possible methods your bank can employ to remeody ite
2. On your mother's birthday, you bought her a new iPhone from Best Buy. Assume that you mad your purchase by writing a check for $900, and the store promptly deposited your check in its bank. i. Using T-accounts, show the effect of this transaction on your bank and on the Best Buy's bank (after your check is processed and cleared by the Federal Reserve). ii. What happens to your bank's reserves? What happens to the reserves of Best Buy's bank? iii.Assuming the reserve requirement is 10 percent and your bank was holding no excess reserves initially, what is the level of excess reserves in your bank after the transaction? iv.List two possible methods your bank can employ to remeody ite
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:2. On your mother's birthday, you bought her a new iPhone from Best Buy. Assume that you made-
your purchase by writing a check for $900, and the store promptly deposited your check in its
bank.
i. Using T-accounts, show the effect of this transaction on your bank and on the Best Buy's hank (after
your check is processed and cleared by the Federal Reserve).
ii. What happens to your bank's reserves? What happens to the reserves of Best Buy's bank?
iii. Assuming the reserve requirement is 10 percent and your bank was holding no excess reserves
initially, what is the level of excess reserves in your bank after the transaction?
iv.List two possible methods your bank can employ to remedy its reserve deficiency.
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