Suppose First Main Street Bank, Second Republic Bank and Third Fidelity Bank all have zero excess reserves. The federal reserve buys a government bond worth $900,000 from
a person who is a client of First Main Street Bank and he deposits his money in his checking account at First Main Street Bank. Because the required reserve ration is 25%, the 900,000 deposit, does that increase or decrease and by how much
or decrease First Main Street Bank excess reserves and by how much? and 2. increases or decreases First Main Street Bank's required reserves by how much?
Part 2
First Main Street Bank loans out all of its new excess reserves to a customer who writes a check to someone else who she owes money to. The persons deposits the check into his checking account at Second Republic. Then Second Republic lends out all of its excess reserves to a customer who writes a check to his friend. That person deposits the check into his bank at Third Fidelity bank. Third Fidelity lends out all of its excess reserves as well. So what would be the totals for the three banks.
What would be the "Increase in deposits for each bank", "Increase in required Reserves" and "Increase in Loans.
a person who is a client of First Main Street Bank and he deposits his money in his checking account at First Main Street Bank. Because the required reserve ration is 25%, the 900,000 deposit, does that increase or decrease and by how much
or decrease First Main Street Bank excess reserves and by how much? and 2. increases or decreases First Main Street Bank's required reserves by how much?
Part 2
First Main Street Bank loans out all of its new excess reserves to a customer who writes a check to someone else who she owes money to. The persons deposits the check into his checking account at Second Republic. Then Second Republic lends out all of its excess reserves to a customer who writes a check to his friend. That person deposits the check into his bank at Third Fidelity bank. Third Fidelity lends out all of its excess reserves as well. So what would be the totals for the three banks.
What would be the "Increase in deposits for each bank", "Increase in required Reserves" and "Increase in Loans.