Assume Bank A received an initial deposit of $6000, Bank B received an initial
deposit of $10,000, and Bank C received an initial deposit of $2000. Each kept a
percentage of the money deposited in reserve based on the reserve rate and
loaned out the rest, and the amount each loaned out was eventually all deposited
back into the bank. This cycle continued indefinitely for all three banks. A list of
initial deposits, money multipliers, reserve rates, and total amounts deposited is
shown below.
(6 points: Part I - 2 points; Part II - 2 points; Part III - 2 points)
Initial Deposits: $6000; $10,000; $2000
Money Multipliers: 50, 25, 20
Reserve Rates: 5%; 2%; 4%
Total Amount Deposited: $100,000; $200,000; $150,000
Part I: Choose the initial deposit, money multiplier, reserve rate, and total amount
deposited that would make sense for Bank A.