Chapter 14. The Deposit Expansion Process: The Simple Analytics. © Thomson/South-Western 2006. Banks & The creation of Bank Deposits. Banking System. Macroeconomic Variables Output Employment Price Level. Credit availability & The Money Supply. Banks And The Creation Of Bank Deposits .
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The Deposit Expansion Process: The Simple Analytics
& The Money Supply
When the check is deposited in a St. Louis bank and clears,
Demand deposits in the St. Louis bank have increased by $10,000.
Demand deposits in the Hometown Bank have decreased by $10,000.1. Writing a Check
Q: Suppose the reserve requirement is 20%, you find $1million of currency in your grandmother’s attic and deposit into her bank checking account. Calculate:
Suppose the reserve requirement is 10%. The Fed buys $1,000 million worth of securities from the dealer.