Assets Liabilities Reserves $ 1,500 Loans $ 3,500 Initial Deposit $ 5,000 Assume required reserve ratio is 10 percent and that 100% of all the loans are deposited as new deposits. ii. Calculate the deposit and credit multiplier.

Assets Liabilities Reserves $ 1,500 Loans $ 3,500 Initial Deposit $ 5,000 Assume required reserve ratio is 10 percent and that 100% of all the loans are deposited as new deposits. ii. Calculate the deposit and credit multiplier.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Assets

Liabilities

Reserves $ 1,500

Loans $ 3,500

Initial Deposit $ 5,000

Assume required reserve ratio is 10 percent and that 100% of all the loans are deposited as new deposits.

ii. Calculate the deposit and credit multiplier.

Definition Definition Minimum amount that a commercial bank must hold in liquid assets in order to fulfill central bank regulations.

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