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