Chapter 17, Problem 2Q

To determine

The deposit creation that takes place for the entire banking system when First National Bank receives an extra $100 of reserves but decides not to lend out any of these reserves.

Concept Introduction:

Checkable deposit: It refers to the demand deposit accounts against which drafts and checks can be issued. Checkable deposit accounts include savings accounts, checking accounts, money market accounts, negotiable draftsand checking accounts.