Suppose the Federal Reserve set the reserve requirement at 20%. Assume that banks lend all reserves that are not required to be held. Instructions: Round your answers to two decimal places. a. Complete the table below based on this Information. Fractional Reserve Banking Transaction Sean receives $1,000 in cash and deposits the funds into his checking account. Sean's bank loans Maria all reserves that are not required to be held. Maria's bank loans Jackson all reserves that are not required to be held. Jackson's bank loans Paul all reserves that are not required to be held. Total Money Created by Transactions Transaction Sean receives $1,000 in cash and deposits the funds into his checking account. Sean's bank loans Maria all reserves that are not required to o be held. Deposit Maria's bank loans Jackson all reserves that are not required to be held. TILL b. Suppose Instead that the reserve requirement is 15%. Complete the table using the new reserve requirement. Fractional Reserve Banking $1,000.00 Deposit $1,000.00 Reserves Required to be Held Jackson's bank loans Paul all reserves that are not required to be held. Total Money Created by Transactions CAs the reserve requirement decreases, the amount of money created (Click to select) Reserves Required to be Held Reserves to Lend Out Reserves to Lend Out
Suppose the Federal Reserve set the reserve requirement at 20%. Assume that banks lend all reserves that are not required to be held. Instructions: Round your answers to two decimal places. a. Complete the table below based on this Information. Fractional Reserve Banking Transaction Sean receives $1,000 in cash and deposits the funds into his checking account. Sean's bank loans Maria all reserves that are not required to be held. Maria's bank loans Jackson all reserves that are not required to be held. Jackson's bank loans Paul all reserves that are not required to be held. Total Money Created by Transactions Transaction Sean receives $1,000 in cash and deposits the funds into his checking account. Sean's bank loans Maria all reserves that are not required to o be held. Deposit Maria's bank loans Jackson all reserves that are not required to be held. TILL b. Suppose Instead that the reserve requirement is 15%. Complete the table using the new reserve requirement. Fractional Reserve Banking $1,000.00 Deposit $1,000.00 Reserves Required to be Held Jackson's bank loans Paul all reserves that are not required to be held. Total Money Created by Transactions CAs the reserve requirement decreases, the amount of money created (Click to select) Reserves Required to be Held Reserves to Lend Out Reserves to Lend Out
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose the Federal Reserve set the reserve requirement at 20%. Assume that banks lend all reserves that are not required to be
held.
Instructions: Round your answers to two decimal places.
a. Complete the table below based on this information.
Fractional Reserve Banking
Transaction
Sean receives $1,000 in cash and deposits the funds into
his checking account.
Sean's bank loans Maria all reserves that are not required
to be held.
Maria's bank loans Jackson all reserves that are not
required to be held.
Transaction
Sean receives $1,000 in cash and deposits the funds into
his checking account.
Sean's bank loans Maria all reserves that are not required
to be held.
Deposit
Maria's bank loans Jackson all reserves that are not
required to be held.
$1,000.00
Jackson's bank loans Paul all reserves that are not
required to be held.
Total Money Created by Transactions
b. Suppose Instead that the reserve requirement is 15%. Complete the table using the new reserve requirement.
Fractional Reserve Banking
1000
Deposit
$
$1,000.00
Jackson's bank loans Paul all reserves that are not
required to be held.
Total Money Created by Transactions
c. As the reserve requirement decreases, the amount of money created (Click to select)
Reserves Required to be
Held
Reserves Required to be
Held
Reserves to Lend Out
$
Reserves to Lend Out
$
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