Exercise $2$

This exercise shows how the multiplier process works.

Assume that all banks in the system lend all of their excess reserves, that the reserve ratio for all banks is $0\mathrm{.}25,$ and that all loans are retumed to the banking system in tho form of transactions accounts. Uso the information from the balance sheets in Table $13\mathrm{.}2,$ Table $13\mathrm{.}3,$ Table $13\mathrm{.}4,$ and Table $13\mathrm{.}5$ to answer Questions $1-6.$

Table $13\mathrm{.}2.$ Initial balance sheet for Bank A$,$ Bank B$,$ & Bank C

$\backslash$table$[[$Assets$,$Llabilitios$],[$Required reserves,$$25,000,$Transactions accounts,$$100,000$