Tasks:
Suppose that First National Bank loans out all its new excess reserves to Nancy, who immediately uses the funds to write a check for Mark. Mark deposits the funds immediately into his checking account at Second National Bank. Then, Second National Bank lends out all its new excess reserves to Kyle, who writes a check for Amy, who deposits the money into her account at Third National Bank. Third National Bank lends out all its new excess reserves as well.
Fill in the following table to show the effect of this ongoing chain of events at each of the banks. Enter each answer to the nearest penny.
Bank Increase in Demand Deposits Increase in Required Reserves Increase in Loans
First National Bank
Second National Bank
Third National Bank