2)Assume the banking system has $100 billion in demand deposits and $10 billion in reserves. In addition, assume that the required reserve ratio is 5%. Answer the following questions: a) How much excess reserves are in this system? b) What is the value of the money multiplier? c) What is the maximum amount of change in demand deposit creation that could take place if the banking system lent out all of its excess reserves.
2)Assume the banking system has $100 billion in demand deposits and $10 billion in reserves. In addition, assume that the required reserve ratio is 5%. Answer the following questions: a) How much excess reserves are in this system? b) What is the value of the money multiplier? c) What is the maximum amount of change in demand deposit creation that could take place if the banking system lent out all of its excess reserves.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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12)Assume the banking system has $100 billion in demand deposits and $10 billion in reserves. In addition, assume
that the
a) How much
b) What is the value of the money multiplier?
c) What is the maximum amount of change in demand deposit creation that could take place if the banking
system lent out all of its excess reserves.
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