Suppose First Main Street Bank, Second republic bank, and third fideli

QUESTION

Suppose First Main Street Bank, Second republic bank, and third fidelity bank all have excess reserves. The required ratio is 25%. The Federal Reserve buys a government bond worth $900,000 from Brian, a client of First Main Street Bank. He deposits the money in his checking account at First Main Str¦
Going in order of how you have to answer: increases net worth 900,000 demand deposits 900,000 increases 675,000 increases 225,000 T-table: First Main Street Bank: (Increase in Demand Dep) = 900,000 (Increase in req reserves)= 225,000 Second Republic Bank: (Increase in Demand¦

Dep) = 675,000 (Increase in req reserves)= 168,750 Third Fidelity Bank: (Increase in Demand Dep) = 506,250 (Increase in req reserves)= 126,562.5 Last two answers: 3,600,000 2,700,000

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