Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 20%. The Federal Reserve buys a government bond worth $1,500,000 from Gilberto, a client of First Main Street Bank. He deposits the money into his checking account at First Main Street Bank. The following table reflects any changes in First Main Street Bank's balance sheet (before the bank makes any new loans): Assets Liabilities
Loans $500,000 Checkable Deposits $500,000

The following table shows the effects of new deposit on excess and required reserves, assuming a required reserve ratio is 10%.

Hint: If the change is negative, be sure to enter the value as a negative number.

Amount Deposited (Dollars) Change in Excess Reserves (Dollars) Change in Required Reserves (Dollars)
500,000 450,000 50,000

Now, suppose First Main Street Bank loans out all of its new excess reserves to Cho, who immediately writes a check for the full amount to Bob. Bob then immediately deposits the funds into his checking account at Second Republic Bank. Then Second Republic Bank lends out all of its new excess reserves to Kenji, who writes a check to Ginny, who deposits the money in her account at Third Fidelity Bank. Finally, Third Fidelity lends out all of its new excess reserves to Lucia.

Fill in the following table to show the effect of this ongoing chain of events at each banks. Enter each answer to the nearest dollar.

Bank Increase in Checkable Deposits (Dollars) Increase in Required Reserves (Dollars) Increase in Loans (Dollars)
First Main Street Bank
Second Republic Bank
Third Fidelity Bank

Part two of threewhich accurately describes a cause for inflation? the federal reserve requires banks to keep more money on reserve. the federal reserve raises interest rates and slows economic activity. the government places too much money into circulation. the government places too little money into circulation. what are consequences of rapid inflation? (select all that apply.) savings accounts become less desirable because interest earned is lower than inflation individual purchasing power increases, which results in an increase in demand. individual purchasing power decreases, which results in a decrease in demand. people postpone purchasing expensive items, such as homes, until prices drop.how does the federal reserve stabilize and safeguard the nation’s economy? (select all that apply.) it distributes currency and oversees fiscal conditions. it implements american monetary policy. it regulates banks and defends consumer credit rights. it regulates and oversees the nasdaq stock exchange. what are functions of the federal reserve? (select all that apply.) it offers financial services within the government. it creates us coins. it prints us dollars. it enters us currency into circulation.how does the federal reserve bank fit into the balance of power among the three branches of the federal government established by the constitution? the chair of the federal reserve is appointed by the president and approved by the senate. the chair of the federal reserve is elected by popular vote. the chair of the federal reserve is appointed by congress and approved by the supreme court. the chair of the federal reserve is appointed in a secret meeting.who appoints the board of governors of the federal reserve system? the us president the us supreme court the us house of representatives the us senatewhy is federal oversight crucial to the operation of the federal reserve bank? the federal reserve is the nation’s central banking system. the federal reserve controls the nomination of legislators to committees. the federal reserve funds mandatory government expenditures. the federal reserve sets rules and regulations for the new york stock exchange.what is the government accountability office (gao)? an independent agency that answers to congress and audits the federal reserve an internal review agency of the federal reserve used to promote its mission a government agency that answers to congress and audits the united states mint a private agency that advises the dent about fiscal policyhow does the law of comparable advantage lead to international trade? countries that do not engage in trade are in a stronger position economically than countries that do trade. countries that cannot produce products efficiently have to trade for the goods and services that other countries have. countries that have more resources are able to trade for a wider variety of items that can be offered for sale. countries make products they can produce efficiently and are able to get the rest of what they need through trade.when might a country produce a product even though it cannot do so efficiently? (select all that apply.) to ensure national security to minimize the sale of exports to ensure a trade deficit to increase the balance of trade