Exhibit 13-1 Exhibit 13-1 Bank Increase in Checkable Deposits New Required Reserves New Checkable Deposits Created...

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Exhibit 13-1 Exhibit 13-1 Bank Increase in Checkable Deposits New Required Reserves New Checkable Deposits Created...

Exhibit 13-1

Bank	Increase in Checkable Deposits	New Required Reserves	New Checkable Deposits Created by Extending New Loans
A	$0	$0	$1,000
B	$1,000	(A)	(B)
C	(C)	$90	(D)
D	$810	(E)	(F)

Assume that the required reserve ratio is 10%, that there are no cash leakages, and that banks hold zero excess reserves.

Refer to Exhibit 13-1. Suppose that the Federal Reserve conducts open market operations by purchasing $1,000 worth of government securities from Bank A. At the end of this process of money creation, what is the total amount of new checkable deposits?

$100,000

$10,000

$1,000

$1,000,000

business economics

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Exhibit 13-1 Exhibit 13-1 Bank Increase in Checkable Deposits New Required Reserves New Checkable Deposits Created...

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Exhibit 13-1 Exhibit 13-1 Bank Increase in Checkable Deposits New Required Reserves New Checkable Deposits Created...

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