Suppose Southeast Mutual Bank, Walls Fargo Bank, and P2Morton Bank all have zero excess reserves, The required reserve ratio is presently set at 10%. Bab, a Southeast Mutual Bank customer, deposits $500,000 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).
Complete the fonowng tabie to show the efrect of a new deposit on excess and required reserves when the requlred reserve ratio is los.
Hint: If the change is negative, be sure to enter the value as negative number.
Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Yvette, who immediately uses the fonts to write a check to Sean. Sean deposits the funds immediately into his checking account at Walls Fargo Bank. Then Walls Fargo Bank lends out all of its new excess reserves to Eric, who writes a check to Cho, who deposits the money into her account at PJMorton Bank. PJMorton lends out all at its new express reserves to Ginny in turn.