Question

Table 1 shows the financial position of Bank Uno once $4111.00 has been deposited.

Assume that the required reserve ratio is 9.00%, that banks do not keep excess reserves, and that all the money loaned out from Bank Uno is deposited into Bank Duo (whose loans go to other banks not shown here).

Once the lending and depositing process is complete, what will the accounts look like in Tables 2 and 3? Specify all answers to two decimal places.

Table 1. Bank Uno's Initial T-Account

Assets	Liabilities
Reserves: $4111.00	Deposits: $4111.00

Table 2. Bank Uno's T-Account After Loans

Assets	Liabilities
Reserves: ?	Deposits: ?
Loans: ?

Table 3. Bank Duo's T-Account After Deposits and Loans

Assets	Liabilities
Reserves: ?	Deposits: ?
Loans: ?

What are Bank Uno's deposits in Table 2?

$

What are Bank Uno's reserves in Table 2?

$

What are Bank Duo's loans in Table 3?

$

What are Bank Uno's loans in Table 2?

$

Answer 1

Table 2. Bank Uno's T-Account After Loans

Assets	Liabilities
Reserves: 369.99	Deposits: 4111
Loans: 3,741.01

Table 3. Bank Duo's T-Account After Deposits and Loans

Assets	Liabilities
Reserves: 336.69	Deposits: 3741.01
Loans: 3404.32

- What are Bank Uno's deposits in Table 2?

$4111

- What are Bank Uno's reserves in Table 2?

$369.99

- What are Bank Duo's loans in Table 3?

$3404.32

- What are Bank Uno's loans in Table 2?

$3,741.01

Explanation:

When bank Uno receives deposit of $4111, it will keep 9% of the funds as reserves which is $369.99 and loan the rest of it which is $3741.01 to bank duo. When bank duo receives $3741.01 as deposits, it will keep 9% of it as reserves which is $336.6909= 336.69 ( two decimal place)  and loan the rest of it which is $3404.32

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