Assume that commercial banks do not hold excess reserves. The banking system has $30 million in reserves and has a desired reserve ratio of 10 percent. The public holds $50 million in currency. Then the public decides to withdraw $20 million in currency from the banking system. If we want to keep the money supply unchanged, what should be the new reserve ratio? Select one: O a. 11.235 percent cross out O b. 3.571 percent cross out O c. 10.897 percent cross out O d. 8.5 percent cross out O e. None of the above cross out
Assume that commercial banks do not hold excess reserves. The banking system has $30 million in reserves and has a desired reserve ratio of 10 percent. The public holds $50 million in currency. Then the public decides to withdraw $20 million in currency from the banking system. If we want to keep the money supply unchanged, what should be the new reserve ratio? Select one: O a. 11.235 percent cross out O b. 3.571 percent cross out O c. 10.897 percent cross out O d. 8.5 percent cross out O e. None of the above cross out
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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