Can you help me answer this question **Effect of New Deposit on Bank Reserves**Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 25%.**Hint:** If the change is negative, be sure to enter the value as a negative number.| Amount Deposited (Dollars) | Change in Excess Reserves (Dollars) | Change in Required Reserves (Dollars) ||----------------------------|-------------------------------------|---------------------------------------|| 1,800,000 | | |---**Scenario:**Suppose First Main Street Bank loans out all of its new excess reserves to Becky, who immediately uses the funds to write a check to Alex. Alex deposits the funds into his checking account at Second Republic Bank. Second Republic Bank lends out all of its new excess reserves to Hubert, who writes a check to Eileen, who deposits the money into her account at Third Fidelity Bank. Third Fidelity lends out all of its new excess reserves to Kate in turn.Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar.| | Increase in Deposits (Dollars) | Increase in Required Reserves (Dollars) | Increase in Loans (Dollars) ||--------------------------|-------------------------------|-----------------------------------------|-----------------------------|| First Main Street Bank | | | || Second Republic Bank | | | || Third Fidelity Bank | | | |---Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these assumptions, the $1,800,000 injection into the money supply results in an overall increase of ___________ in demand deposits. Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 25%. Clancy, a client of First Main Street Bank, deposits $1,800,000 into his checking account at First Main Street Bank.---**Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans).**| Assets | | Liabilities | ||---------------|----------|-------------|-----------|| Reserves | $1,350,000 | Deposits | $1,800,000 |---**Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 25%.***Hint: If the change is negative, be sure to enter the value as a negative number.*| Amount Deposited (Dollars) | Change in Excess Reserves (Dollars) | Change in Required Reserves (Dollars) ||----------------------------|-------------------------------------|---------------------------------------|| 1,800,000 | | |---Now, suppose First Main Street Bank loans out all of its new excess reserves to Becky, who immediately uses the funds to write a check to Alex. Alex deposits the funds immediately into his checking account at Second Republic Bank. Then Second Republic Bank lends out all of its new excess reserves to Hubert, who writes a check to Eileen, who deposits the money into her account at Third Fidelity Bank. Third Fidelity lends out all of its new excess reserves to Kate in turn.Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar.

The amount of money that the banks are required to hold as reserves is known as the required…

Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 25%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves Change in Required Reserves (Dollars) (Dollars) (Dollars) 1,800,000 Now, suppose First Main Street Bank loans out all of its new excess reserves to Becky, who immediately uses the funds to write a check to Alex. Alex deposits the funds immediately into his checking account at Second Republic Bank. Then Second Republic Bank lends out all of its new excess reserves to Hubert, who writes a check to Eileen, who deposits the money into her account at Third Fidelity Bank. Third Fidelity lends out all of its new excess reserves to Kate in turn. Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar. First Main Street Bank Second Republic Bank Third Fidelity Bank Increase in Deposits Increase in Required Reserves Increase in Loans (Dollars) (Dollars) (Dollars) Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these in demand deposits. assumptions, the $1,800,000 injection into the money supply results in an overall increase of

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC