Show this transaction in a t-account for the bank of bonzo

Assignment Help Econometrics

Reference no: EM131309051

1. Suppose Fred deposits $8,000 in cash into his checking account at the Bank of Bonzo. The Bank of Bonzo has no excess reserves and is subject to a 5 percent required reserve ratio.

a. Show this transaction in a T-account for the Bank of Bonzo.

b. Assume the Bank of Bonzo makes the maximum loan possible from Fred's deposit to Clarice and show this transaction in a new T-account.
c. Clarice decides to use the money she borrowed to take a trip to Tahiti. She writes a check for the entire loan amount to the Tropical Paradise Travel Agency, which deposits the check in its bank, the Iceberg Bank of Barrow, Alaska. When the check clears, the Bonzo Bank transfers the funds to the Iceberg Bank. Show these transactions in a new T-account for the Bonzo Bank and in a T-account for the Iceberg Bank.

d. What is the maximum amount of deposits that can be created from Fred's initial deposit?

e. What is the maximum amount of loans that can be created from Fred's initial deposit?

2. What are the three tools the Fed can use to change the money supply? Briefly describe how the Fed can use each of these tools to either increase or decrease the money supply.

Reference no: EM131309051

Questions Cloud

Describe one or more agile project management approaches : Briefly describe the TPM waterfall method. Briefly describe one or more Agile project management approaches. Compare and contrast TPM and Agile methods, emphasizing the strengths and weaknesses of each.

How do the pieces of data relate to each other : What trends can be identified in the data? - What could the trends mean?- How do the pieces of data relate to each other?

Ten lessons in leadership : In an analysis of 750-900 words, examine the theoretical framework, style, and leadership traits presented in the story. Discuss how this particular individual has adopted leadership as a vocation.

Overall organizational point of view : How can an effective leader empower his/her employees and why, from an overall organizational point of view, is employee empowerment significant? Provide some relevant examples (positive or negative).

Show this transaction in a t-account for the bank of bonzo : Suppose Fred deposits $8,000 in cash into his checking account at the Bank of Bonzo. The Bank of Bonzo has no excess reserves and is subject to a 5 percent required reserve ratio.

Explain three ways in which you could effectively engage : Choose a field (e.g., marketing, sales, teaching, etc.) where you believe presentations are important. Describe three ways in which you could effectively engage the audience in your chosen field through the use of PowerPoint 2013 presentations.

How do you define american culture and society : Do you believe the world is interconnected? If so, how? Give examples.How do you define American culture and society?What are the differences between the two?How has your example of American culture influenced other countries? What culture do you mos..

Locate three news stories in which someone quotes statistics : Politicians, businesspeople, and others love to quote statistics to support their viewpoints. Locate three news stories in which someone quotes statistics to support a particular case.

Explain the role of technology in project management : Explain the role of technology in project management. Analyze the required elements of a communication plan. Describe the different organizational structures as it relates to project management (i.e., functional, project-based, matrix).

User Account

All Pages