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Refer to Table 13-1. What are the new checkable deposits created by extending new loans for Bank B? $1,000 B) $900 $990 D) $90

Refer to Table 13-1. What are the new checkable deposits created by extending new loans for Bank B? $1,000 B) $900 $990 D) $90

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Consider the U.S. banking system in 2007. Assume that the required reserve ratio is 10%, that there are no cash leakages, and that banks hold zero excess reserves. Suppose that the Federal Reserve conducts open market operations by purchasing $1,000 worth of government securities from Bank A. As a result, Bank A finds itself with $1,000 in excess reserves that it lends out and those funds end up in Bank B. Q с D A) $1,000 B $900 Bank $990 A B Increase in Checkable Deposits $0 $1,000 $810 I New Required Reserves $0 LA $90 Refer to Table 13-1. What are the new checkable deposits created by extending new loans for Bank B? New Checkable Deposits Created by Extending New Loans $1,000
Transcribed Image Text:Consider the U.S. banking system in 2007. Assume that the required reserve ratio is 10%, that there are no cash leakages, and that banks hold zero excess reserves. Suppose that the Federal Reserve conducts open market operations by purchasing $1,000 worth of government securities from Bank A. As a result, Bank A finds itself with $1,000 in excess reserves that it lends out and those funds end up in Bank B. Q с D A) $1,000 B $900 Bank $990 A B Increase in Checkable Deposits $0 $1,000 $810 I New Required Reserves $0 LA $90 Refer to Table 13-1. What are the new checkable deposits created by extending new loans for Bank B? New Checkable Deposits Created by Extending New Loans $1,000
Consider the U.S. banking system in 2007. Assume that the required reserve ratio is 10%, that there are no cash leakages, and that banks hold zero excess reserves. Suppose that the Federal Reserve conducts open market operations by purchasing $1,000 worth of government securities from Bank A. As a result, Bank A finds itself with $1,000 in excess reserves that it lends out and those funds end up in Bank B. Q с D A) $1,000 B $900 Bank $990 A B Increase in Checkable Deposits $0 $1,000 $810 I New Required Reserves $0 LA $90 Refer to Table 13-1. What are the new checkable deposits created by extending new loans for Bank B? New Checkable Deposits Created by Extending New Loans $1,000
Transcribed Image Text:Consider the U.S. banking system in 2007. Assume that the required reserve ratio is 10%, that there are no cash leakages, and that banks hold zero excess reserves. Suppose that the Federal Reserve conducts open market operations by purchasing $1,000 worth of government securities from Bank A. As a result, Bank A finds itself with $1,000 in excess reserves that it lends out and those funds end up in Bank B. Q с D A) $1,000 B $900 Bank $990 A B Increase in Checkable Deposits $0 $1,000 $810 I New Required Reserves $0 LA $90 Refer to Table 13-1. What are the new checkable deposits created by extending new loans for Bank B? New Checkable Deposits Created by Extending New Loans $1,000
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