# Federal Reserve story board

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#### Storyboard Description

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#### Storyboard Text

• I am going to depoist my \$1,000 into my checking account
• Balance= \$1,000. Now, the bank will lend money determined by the required reserve ratio.
• Now, the bank is allowed to lend \$900 because the RRR is 0.1 or 10%
• The bank can lend Esther \$900 and she can deposit it to her checking account.
• Esther's \$900 have now been included in M1. The loan caused the money supply to go from \$1,000 + \$900 = \$1,000. Now, Esther can use her \$900 to buy a car from Alex.
• Alex deposits the \$900 from Esther's account into his account. The bank keeps ten percent of his deposit (\$90). Then , the bank will lend \$810 to its customers which is then added to the money supply. Now, when you add \$1,000 + \$900 + \$810 = 2,710
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