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First National Bank Assets Liabilities and Net Worth US Treasury Bonds $450,000 Net Worth $500,000 Reserves (Cash) $175,000 Checkable Deposits $250,000 Loans $125,000 Second National Bank Assets Liabilities and Net Worth US Treasury Bonds $100,000 Net Worth $250,000 Reserves (Cash) $250,000 Checkable Deposits $100,000 Third National Bank Assets Liabilities and Net Worth US Treasury Bonds $900,000 Net Worth $1,000,000 Reserves (Cash) $350,000 Checkable Deposits $500,000 Loans $250,000The Required Reserve Ratio is 25% for all banks. Assuming that all the customers that have outstanding loans have used all of those additional funds to invest in new machinery for their businesses (therefore, the amount of Checkable Deposits is the true liability the bank has to its customers), then $_____________ is the resulting change to the loan creating potential of the whole system (these three banks) as a result of Second National Bank customers depositing an additional $400,000 in their Checkable Deposit accounts in new loans.

First National Bank Assets Liabilities and Net Worth US Treasury Bonds $450,000 Net Worth $500,000 Reserves (Cash) $175,000 Checkable Deposits $250,000 Loans $125,000 Second National Bank Assets Liabilities and Net Worth US Treasury Bonds $100,000 Net Worth $250,000 Reserves (Cash) $250,000 Checkable Deposits $100,000 Third National Bank Assets Liabilities and Net Worth US Treasury Bonds $900,000 Net Worth $1,000,000 Reserves (Cash) $350,000 Checkable Deposits $500,000 Loans $250,000The Required Reserve Ratio is 25% for all banks. Assuming that all the customers that have outstanding loans have used all of those additional funds to invest in new machinery for their businesses (therefore, the amount of Checkable Deposits is the true liability the bank has to its customers), then $_____________ is the resulting change to the loan creating potential of the whole system (these three banks) as a result of Second National Bank customers depositing an additional $400,000 in their Checkable Deposit accounts in new loans.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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First National Bank Assets Liabilities and Net Worth US Treasury Bonds $450,000 Net Worth $500,000 Reserves (Cash) $175,000 Checkable Deposits $250,000 Loans $125,000 Second National Bank Assets Liabilities and Net Worth US Treasury Bonds $100,000 Net Worth $250,000 Reserves (Cash) $250,000 Checkable Deposits $100,000 Third National Bank Assets Liabilities and Net Worth US Treasury Bonds $900,000 Net Worth $1,000,000 Reserves (Cash) $350,000 Checkable Deposits $500,000 Loans $250,000The Required Reserve Ratio is 25% for all banks.

Assuming that all the customers that have outstanding loans have used all of those additional funds to invest in new machinery for their businesses (therefore, the amount of Checkable Deposits is the true liability the bank has to its customers), then $_____________ is the resulting change to the loan creating potential of the whole system (these three banks) as a result of Second National Bank customers depositing an additional $400,000 in their Checkable Deposit accounts in new loans.

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