AP MACRO UNIT 5 TACCOUNTS Creating a Bank
AP MACRO UNIT 5: T-ACCOUNTS
Creating a Bank w/ $250, 000 cash Assets Legal Reserves $0 Excess Reserves $250, 000 Liabilities + net worth Capital stock $250, 000 Deposits $0
Acquiring $240, 000 Property Assets Legal Reserves $0 Excess Reserves $10, 000 Property $240, 000 Liabilities + net worth Capital stock $250, 000 Deposits $0
Accepting $100, 000 Deposit 20% reserve requirement Assets Legal Reserves $0 $20, 000 Excess Reserves $10, 000 $90, 000 Property $240, 000 Liabilities + net worth Deposits $0 $100, 000 Capital stock $250, 000
Clearing a $50, 000 Check (Part 1) Assets Legal Reserves $20, 000 Excess Reserves $90, 000 $40, 000 Property $240, 000 Liabilities + net worth Deposits $100, 000 $50, 000 Capital stock $250, 000
Clearing a $50, 000 Check (Part 2) Assets Legal Reserves $20, 000 $10, 000 Excess Reserves $40, 000 $50, 000 Property $240, 000 Liabilities + net worth Deposits $50, 000 Capital stock $250, 000 less deposits = less legal reserves; money is moved to excess reserves
Granting a $50, 000 Loan (borrower puts money in a checking account) Assets Legal Reserves $10, 000 Excess Reserves $50, 000 Loans $0 $50, 000 Property $240, 000 Liabilities + net worth Deposits $50, 000 $100, 000 Capital stock $250, 000 Money has been created!
Repaying a Loan (with $$ from the checking account) Assets Liabilities + net worth Legal Reserves Deposits $10, 000 $100, 000 $50, 000 Excess Reserves Capital stock $250, 000 $50, 000 Money has been Loans destroyed! $50, 000 $0 Property $240, 000
Bank buying securities/bonds from the public Assets Reserves $10, 000 Securities (an asset to the bank) $0 $50, 000 Property $240, 000 Liabilities + net worth Deposits (bond seller has $$ from the sale) $0 $50, 000 Capital stock $250, 000 Money has been created!
Bank selling Government securities/bonds to the public Assets Reserves $10, 000 Securities $50, 000 $0 Property $240, 000 Liabilities + net worth Deposits (bond seller spends $$ on the purchase) $50, 000 $0 Capital stock $250, 000 Money has been destroyed!
Fed buying securities/bonds from the bank Assets Liabilities + net worth Reserves Deposits $10, 000 $0 Excess Reserves Capital stock $0 $50, 000 $250, 000 Securities $50, 000 $0 Money has been Property created! $240, 000
Fed selling Government securities/bonds to the bank Assets Liabilities + net worth Legal Reserves Deposits $10, 000 $0 Excess Reserves Capital stock $50, 000 $0 $250, 000 Securities $0 $50, 000 Money has been Property destroyed! $240, 000
- Slides: 12