AP Macroeconomics · Unit 4.4

Reserve
Judgment

Financial Sector Simulation

You are the loan officer at First National Bank. Read the economic forecast, set your interest rate, then handle deposits, withdrawals, loans, and Treasury bonds. Earn interest without lending past your excess reserves: four violations and the bank is seized.

$20,000 Seed Capital
Owner's Equity — sits in reserves and anchors your balance sheet. Assets = Deposits + Owner's Equity at all times.
Read the Forecast FirstEach quarter opens with an economic outlook. Set your rate before customers arrive.
Rate Has ConsequencesToo low → defaults. Too high → loan volume shrinks. Stagflation → no perfect answer.
Show Your WorkDelta equations ask how reserves changed. Two correct and scaffolding drops.
Loans vs. T-BondsEach quarter offers a Treasury bond. Safe income vs. lending risk — your choice.
4 quarters · 16 events · 81 possible scenarios
Quarter 1 of 4

Spring Quarter

10%
Reserve Req.
⚠️ Loan Default Notice
📰 Economic Forecast

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Key formulas: Required Reserves = Deposits × RRR Excess Reserves = Reserves − Required

Set Your Interest Rate

Read the forecast above, then set your loan interest rate for this quarter.

5%
1% — Stimulative10% — Restrictive
Adjust the slider based on the economic conditions above.
↑ You must set a rate before beginning
🏦 First National Bank
Loan Officer Dashboard
Quarter
1/4
Event
1/4
RRR
10%
Your Rate
5%
Fed Warn.
0
Score
1000
⚖ Balance Sheet
Reserve Analysis
Total Reserves$2,000
Required Reserves$0
Excess Reserves$2,000
RRR = 10%
Profitability
Loan Interest (YTD)$0
T-Bond Income (YTD)$0
Loans Outstanding$0
Loan Repayments (YTD)$0
Bonds Matured (YTD)$0
Defaults (YTD)$0
Fed Penalties (YTD)$0
Net Profit$0
Event 1 of 4 Q1 · RRR 10% · Rate 5%
DEPOSIT 🏦
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$0
End of Quarter 1

Quarter Complete

🏛️

Federal Takeover

Repeated reserve violations have forced the Federal Reserve to seize First National Bank. Your lending repeatedly exceeded your legal excess reserves.

First National Bank · Annual Report

Year End Results

Final Performance

💰 Money Multiplier Analysis

Final Challenge: Deposit Expansion

🔄 Gray Area GREY AREA
🏃

Bank Run!

✅

Well done!