the money-creation process

Project Description:

suppose that first national bank, second national bank, and third national bank have zero
excess reserves. the required reserve ratio is 20%. the federal reserve buys a government
bond worth $1.5 million from john, a client of first national bank. he deposits the money into
his checking account at first national bank.
suppose that first national bank loans out all its new excess reserves to nancy, who
immediately uses the funds to write a check for mark. mark deposits the funds immediately
into his checking account at second national bank. then, second national bank lends out all its
new excess reserves to kyle, who writes a check for amy, who deposits the money into her
account at third national bank. third national bank lends out all its new excess reserves as
fill in the following table to show the effect of this ongoing chain of events at each of the banks.
enter each answer to the nearest penny.
increase in
demand deposits
increase in required
increase in
first national bank
second national bank
third national bank
remember to adhere to apa guidelines, standards, and formatting.
submission requirements:
submit the analysis for grading in approximately two to three pages before the end of the
format: microsoft word
font: arial, 12-point, double-spaced
Skills Required:
Project Stats:

Price Type: Negotiable

Total Proposals: 6
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