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You live in a world with a universal 8.5% required reserve rate for all depository institutions....

You live in a world with a universal 8.5% required reserve rate for all depository institutions. Assume the police take the $300,000 found in Whitey Bolger’s walls and deposits the cash back in the banking system (an example of forced “dishoarding”). A) What will the change in the bank’s T-account look like immediately after the deposit? B) Assuming the bank wants no excess reserves, what would its T-account look like after it loans out the excess reserves from the first $300,000 deposit? C) What would be the ending T-account if no bank held excess reserves (following the $300,000 deposit)? (Note: follow the same process used in class.)

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