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Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Sharon, who immediately uses the funds to write a check to Paolo. Paolo deposits the funds immediately into his checking account at Walls Fergo Bank. Then Walls Fergo Bank lends out all of its new excess reserves to Carlos, who writes a check to Amy, who deposits the money into her account at PJMorton Bank. PJMorton lends out all of its new excess reserves to Deborah in turn. Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar. Southeast Mutual Bank Walls Fergo Bank PJMorton Bank Increase in Deposits Increase in Required Reserves (Dollars) (Dollars) 250,000 225,000 202,500 25,000 22,500 20,250 Increase in Loans (Dollars) 225,000 202,500 182,250 Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these

Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Sharon, who immediately uses the funds to write a check to Paolo. Paolo deposits the funds immediately into his checking account at Walls Fergo Bank. Then Walls Fergo Bank lends out all of its new excess reserves to Carlos, who writes a check to Amy, who deposits the money into her account at PJMorton Bank. PJMorton lends out all of its new excess reserves to Deborah in turn. Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar. Southeast Mutual Bank Walls Fergo Bank PJMorton Bank Increase in Deposits Increase in Required Reserves (Dollars) (Dollars) 250,000 225,000 202,500 25,000 22,500 20,250 Increase in Loans (Dollars) 225,000 202,500 182,250 Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these

ECON MACRO
ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter14: Banking And The Money Supply
Section: Chapter Questions
Problem 3.4P
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I think I got it all wrong. So could someone please redo them and check my answers thank you so much! 

Especially the last question is  "supply results in overall increase of 250,000 dollars or 2,250,000dollars, or 2,500,000dollars in demand deposits" these are the three choices!!

Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Sharon, who immediately uses the funds to write a check to Paolo. Paolo deposits the funds immediately into his checking account at Walls Fergo Bank. Then Walls Fergo Bank lends out all of its new excess reserves to Carlos, who writes a check to Amy, who deposits the money into her account at PJMorton Bank. PJMorton lends out all of its new excess reserves to Deborah in turn. Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar. Southeast Mutual Bank Walls Fergo Bank PJMorton Bank Increase in Deposits (Dollars) 250,000 225,000 202,500 Increase in Required Reserves (Dollars) 25,000 22,500 20,250 Increase in Loans (Dollars) 225,000 202,500 182,250 Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these assumptions, the $250,000 injection into the money supply results in an overall increase of in demand deposits.
Transcribed Image Text:Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Sharon, who immediately uses the funds to write a check to Paolo. Paolo deposits the funds immediately into his checking account at Walls Fergo Bank. Then Walls Fergo Bank lends out all of its new excess reserves to Carlos, who writes a check to Amy, who deposits the money into her account at PJMorton Bank. PJMorton lends out all of its new excess reserves to Deborah in turn. Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar. Southeast Mutual Bank Walls Fergo Bank PJMorton Bank Increase in Deposits (Dollars) 250,000 225,000 202,500 Increase in Required Reserves (Dollars) 25,000 22,500 20,250 Increase in Loans (Dollars) 225,000 202,500 182,250 Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these assumptions, the $250,000 injection into the money supply results in an overall increase of in demand deposits.
7. The money creation process Suppose Southeast Mutual Bank, Walls Fergo Bank, and PJMorton Bank all have zero excess reserves. The required reserve ratio is presently set at 10%. Van, a Southeast Mutual Bank customer, deposits $250,000 into his checking account at the local branch. Complete the following table to reflect any changes in Southeast Mutual Bank's T-account (before the bank makes any new loans). Reserves Assets $250,000 (Dollars) 250,000 Deposits Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves (Dollars) Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. 225,000 Liabilities Change in Required Reserves (Dollars) $250,000 25,000 Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Sharon, who immediately uses the funds to write a check to Paolo. Paolo deposits the funds immediately into his checking account at Walls Fergo Bank. Then Walls Fergo Bank lends out all of its new excess reserves to Carlos, who writes a check to Amy, who deposits the money into her account at PJMorton Bank. PJMorton lends out all of its new excess reserves to Deborah in turn. Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar.
Transcribed Image Text:7. The money creation process Suppose Southeast Mutual Bank, Walls Fergo Bank, and PJMorton Bank all have zero excess reserves. The required reserve ratio is presently set at 10%. Van, a Southeast Mutual Bank customer, deposits $250,000 into his checking account at the local branch. Complete the following table to reflect any changes in Southeast Mutual Bank's T-account (before the bank makes any new loans). Reserves Assets $250,000 (Dollars) 250,000 Deposits Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves (Dollars) Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. 225,000 Liabilities Change in Required Reserves (Dollars) $250,000 25,000 Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Sharon, who immediately uses the funds to write a check to Paolo. Paolo deposits the funds immediately into his checking account at Walls Fergo Bank. Then Walls Fergo Bank lends out all of its new excess reserves to Carlos, who writes a check to Amy, who deposits the money into her account at PJMorton Bank. PJMorton lends out all of its new excess reserves to Deborah in turn. Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar.
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