Grower Buys Seed

Grower Buys Seed—Model #2

Next, the grower buys 500 bushels of corn seed from the seed dealer for $1,000. (Price: $2.00 per bushel.) That leaves the grower with no money again, but he has seed to plant.

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Grower	Dealer	Bank	Money/Deposits
Pays $1,000 for seed.	Receives $1,000 from grower.	Not Involved.	No change in quantity of money.
Account Balance: $0.00.	Account Balance: $3,250.	Account Balance: $250.	Total Money: $3,500. Deposit Liabilities: $3,500.

Grower

Dealer

Bank

Money/Deposits

Pays $1,000 for seed.

Receives $1,000 from grower.

Not Involved.

No change in quantity of money.

Account Balance:
$0.00.

Account Balance:
$3,250.

Account Balance:
$250.

Total Money: $3,500.

Deposit Liabilities: $3,500.

So far the same as in Model #1.

But, what happens after the grower suffers a total loss of his crop and has no seed to sell...