Compute the overall change in deposits and reserves

Reference no: EM1370862

Suppose an individal who moves from Asia to the United State and brings with him life savings of $40,000, which he deposits in a US bank. For each of the cases below, compute the overall change in deposits and reserves in the US banking system as a resultof this new deposit.

a) 10% target reserve ratio; no cash drain; no reserve excess reserve
b) 10% target reserve ratio; 5% cash drain; no excess reserves
c) 10% target reserve ratio; 5% cash drain; 5% excess reserves

Reference no: EM1370862

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