The solution method please. SCENARIO 10.2: The following table shows the changesin deposits, reserves, and loans of 4 banks as a resultof a $100,000 initial deposit in Bank No. 1. Assume allbanks are loaned up.New Deposit Required Reserve$100,000.00$90,000.00$81,000.00Loans$90,000.00$81000.00$72.O00$65,610.00Bank No. 1$10,000.00Bank No. 2$9,000.00Bank No. 3Bank No. 4$8,100.00$7,290.00$72, 900.00Refer to Scenario 10.2. If the required reserve ratiowere changed to 20%, total loans of Bank No. 2 willchange toSelect one:a. $72,000.b. $64,000.c. $80,000.d. $74,250.

The required reserve can be calculated by using the following formula.

SCENARIO 10.2: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up. New Deposit Required Reserve $100,000.00 Loans Bank No. 1 Bank No. 2 Bank No. 3 Bank No. 4 $10,000.00 $9,000.00 $8,100.00 $7,290.00 $90,000.00 $81.000.00 $72O00 $65,610.00 $90,000.00 $81,000.00 $72,900.00 Refer to Scenario 10.2. If the required reserve ratio were changed to 20%, total loans of Bank No. 2 will change to Select one: a. $72,000. b. $64,000. c. $80,000. d. $74,250.

SCENARIO 10.2: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up. New Deposit Required Reserve $100,000.00 Loans Bank No. 1 Bank No. 2 Bank No. 3 Bank No. 4 $10,000.00 $9,000.00 $8,100.00 $7,290.00 $90,000.00 $81.000.00 $72O00 $65,610.00 $90,000.00 $81,000.00 $72,900.00 Refer to Scenario 10.2. If the required reserve ratio were changed to 20%, total loans of Bank No. 2 will change to Select one: a. $72,000. b. $64,000. c. $80,000. d. $74,250.

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: The Monetary System

Section: Chapter Questions

Problem 5PA

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