a. Henry receives a check for $10,000 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. Assets Change in Reserves: $ Change in Loans: $ b. Suppose that Julle 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 Julle Into Kentucky Bank. Use the table below to show the change in assets and llabilities at Kentucky Bank resulting from this transaction. Assets Change in Reserves: $ Change in Loans: $ Liabilities Change in Deposits: $ Assets Change in Reserves: $ Change in Loans: $ Liabilities Change in Deposits: $ 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. Liabilities Change in Deposits: $ d. How much total money will exist in this scenario given the three balance sheet changes above? $
a. Henry receives a check for $10,000 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. Assets Change in Reserves: $ Change in Loans: $ b. Suppose that Julle 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 Julle Into Kentucky Bank. Use the table below to show the change in assets and llabilities at Kentucky Bank resulting from this transaction. Assets Change in Reserves: $ Change in Loans: $ Liabilities Change in Deposits: $ Assets Change in Reserves: $ Change in Loans: $ Liabilities Change in Deposits: $ 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. Liabilities Change in Deposits: $ d. How much total money will exist in this scenario given the three balance sheet changes above? $
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose the reserve requirement is 15%, 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.
Instructions: Round your answers to two decimal places.
a. Henry receives a check for $10,000 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.
Assets
Change in Reserves: $
Change in Loans: $
b. Suppose that Julle 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 Julle Into Kentucky Bank. Use the table below to show the change in assets and
llabilities at Kentucky Bank resulting from this transaction.
Assets
Change in Reserves: $
Change in Loans: $
Liabilities
Change in Deposits: $
Assets
Change in Reserves: $
Change in Loans: $
Liabilities
Change in Deposits: $
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 IO
show the change in assets and liabilities at Indiana Bank resulting from this transaction.
Liabilities
Change in Deposits: $
d. How much total money will exist in this scenario given the three balance sheet changes above?
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