Assume the Required Reserve Ratio is 20% for all banks.If Rob, a Third National Bank customer, writes a check for $100,000 to Darrin, a First National Bank Customer, who deposits the check in full into his checking account, then what impact has the transaction had on the loan creating potential of the banking system (these three banks)? First National BankAssetsLiabilities and Net WorthUS Treasury BondsReserves (Cash)$450,000$175,000$125,000Net Worth$500,000Checkable Deposits$250,000LoansSecond National BankAssetsLiabilities and Net WorthProperty (Capital)Reserves (Cash)$100,000$250,000Net Worth$250,000$100,000Checkable DepositsThird National BankAssetsLiabilities and Net WorthUS Treasury BondsReserves (Cash)$900,000$350,000Net Worth$1,000,000$500,000Checkable DepositsLoans$250,000

A checkable deposit account measures checks, savings, and allows the consumer to access the account…

Answered: Assume the Required Reserve Ratio is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume the Required Reserve Ratio is 20% for all banks.

If Rob, a Third National Bank customer, writes a check for $100,000 to Darrin, a First National Bank Customer, who deposits the check in full into his checking account, then what impact has the transaction had on the loan creating potential of the banking system (these three banks)?

First National Bank
Assets
Liabilities and Net Worth
US Treasury Bonds
Reserves (Cash)
$450,000
$175,000
$125,000
Net Worth
$500,000
Checkable Deposits
$250,000
Loans
Second National Bank
Assets
Liabilities and Net Worth
Property (Capital)
Reserves (Cash)
$100,000
$250,000
Net Worth
$250,000
$100,000
Checkable Deposits
Third National Bank
Assets
Liabilities and Net Worth
US Treasury Bonds
Reserves (Cash)
$900,000
$350,000
Net Worth
$1,000,000
$500,000
Checkable Deposits
Loans
$250,000

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