You take $100 you had kept under your mattress and
deposit it in your bank account. If this $100 stays in
the banking system as reserves and if banks hold
reserves equal to 10 percent of deposits, by how
much does the total amount of deposits in the banking
system increase? By how much does the money
supply increase?
Answers
Answered by
8
Explanation:
First solve for the multiplier 1/R = 1/10%=10
10 that you use to calculate the deposit .. R means reserve
Deposit =cash deposit x reserve
100x10
=$1000
Total deposits increase $1000
Change in currency is a negative hence
Money supply = currency + deposit
= -$100 + $1000
=$900
Money supply increases by $900
Note : there’s nothing wrong with the previous solution I just added this for anyone who would require further explanation for better understanding
Answered by
3
Answer:
the answer is 900 dollars
Explanation:
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