Business, 19.11.2019 21:31 alejandro8212003

Suppose you deposit $2,000 in currency into your checking account at a branch of bank of america, which we will assume has no excess reserves at the time you make your deposit. also assume that the required reserve ratio is 0.20.
a. use a t-account to show the initial impact of this transaction on bank of america’s balance sheet.
b. suppose that bank of america makes the maximum loan they can from the funds you deposited. using a t-account, show the initial impact of granting the loan on the balance sheet. also include on this account the transaction from (a).
c. now suppose that whoever took out the loan in (b) writes a check for this amount and that the person receiving the check deposits it in a branch of citibank. show the effect of these transactions on the balance sheets of bank of america and citibank bank, after the check has been cleared.
d. what is the maximum increase in checking account deposits that can result from your $2,000 deposit? what is the maximum increase in the money supply? explain.

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Suppose you deposit $2,000 in currency into your checking account at a branch of bank of america, wh...

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