Using T-accounts, indicate what happens when Bank A receives a deposit for $10,000, maintains the reserve...

 

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Using T-accounts, indicate what happens when Bank A receives a deposit for $10,000, maintains the reserve requirements of 10% and loans out the rest of the money to another client who deposits 80% of the amount received for the loan in Bank B and keeps the remaining 20% in cash. Show T-accounts for both bank A and bank B, and calculate the increase in the money supply. Bank A Assets Liabilities What's the change in total deposits in the economy? What's the change in total currency in circulation? Bank B Assets Liabilities Using T-accounts, indicate what happens when Bank A receives a deposit for $10,000, maintains the reserve requirements of 10% and loans out the rest of the money to another client who deposits 80% of the amount received for the loan in Bank B and keeps the remaining 20% in cash. Show T-accounts for both bank A and bank B, and calculate the increase in the money supply. Bank A Assets Liabilities What's the change in total deposits in the economy? What's the change in total currency in circulation? Bank B Assets Liabilities

Answer rating: 100% (QA)

ANSWER Bank A Assets Deposits 10000 Loans 9000 Reserve Assets 1000 Liabilit... View the full answer