A deposit of $100 was made to the bank as we know the money supply won't increase until the bank loans the $100. If the required reserve ratio is 6%, how much will the money supply ultimately increase once this new deposit has gone all the way through the system? What is the money multiplier in this case?
A deposit of $100 was made to the bank as we know the money supply won't increase until the bank loans the $100. If the required reserve ratio is 6%, how much will the money supply ultimately increase once this new deposit has gone all the way through the system? What is the money multiplier in this case?
Chapter25: Money, Banking, And The Federal Reserve System
Section: Chapter Questions
Problem 3P
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![A deposit of $100 was made to the bank as
we know the money supply won't increase
until the bank loans the $100. If the required
reserve ratio is 6%, how much will the money
supply ultimately increase once this new
deposit has gone all the way through the
system? What is the money multiplier in this
case?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7164ade1-ffd0-46f5-9a3d-6281be7ff24e%2F2ac69d7c-4d5f-4155-9451-7641b961ec63%2F3swdmlm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A deposit of $100 was made to the bank as
we know the money supply won't increase
until the bank loans the $100. If the required
reserve ratio is 6%, how much will the money
supply ultimately increase once this new
deposit has gone all the way through the
system? What is the money multiplier in this
case?
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