Assume that people do not change the amount of currency they wish to have in circulation. When a bank finds itself with excess reserves, it lends the excess; the borrower generally uses the funds to...

Assume that people do not change the amount of currency they wish to have in circulation. When a bank finds itself with excess reserves, it lends the excess; the borrower generally uses the funds to pay a third party, who in turn deposits the funds in a different bank. In each of the following cases, use balance sheets to trace the process of money creation (or contraction) through
three banks, showing the change in the money supply at each stage.

Paul Prospector discovers a million dollars worth of gold, and deposits it in his bank (Bank A).  The required reserve ratio is 20 percent.

Assuming banks keep no access reserves and people who borrow money turn around the deposit all of what they receive.  After all the rounds or deposits, by how much will the money supply increase?  Use the Money Supply Multiplier= 1/reserve requirement

Extracted text: Bank A Assets Liabilities Reserves Loans outstanding Addendum: Bank Reserves Actual reserves Required reserves Excess reserves $0 Bank B Assets Liabilities Reserves Loans outstanding Addendum: Bank Reserves Actual reserves Required reserves Excess reserves $0 Bank C Assets Liabilities Reserves Loans outstanding Addendum: Bank Reserves Actual reserves Required reserves Excess reserves $0