Mr. Bill Smith lives in Dayton Ohio and always deposits money into a checking account in a bank nearby. Please calculate the money creation in the U.S. banking system with required reserve ratio at 0.25 in each of the following cases: (a) Bill’s parents wired him $100,000 from Germany. (b) Bill won $100,000 cash from a casino in another state. (c) Bill found $100,000 worth of collectable coins underground at his house. (d) Bill got a $100,000 check which is issued in a U.S. bank from his aunt as gift.
Mr. Bill Smith lives in Dayton Ohio and always deposits money into a checking account in a bank nearby. Please calculate the money creation in the U.S. banking system with required reserve ratio at 0.25 in each of the following cases: (a) Bill’s parents wired him $100,000 from Germany. (b) Bill won $100,000 cash from a casino in another state. (c) Bill found $100,000 worth of collectable coins underground at his house. (d) Bill got a $100,000 check which is issued in a U.S. bank from his aunt as gift.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Mr. Bill Smith lives in Dayton Ohio and always deposits money into a checking account in a bank nearby. Please calculate the money creation in the U.S. banking system with
(a) Bill’s parents wired him $100,000 from Germany.
(b) Bill won $100,000 cash from a casino in another state.
(c) Bill found $100,000 worth of collectable coins underground at his house.
(d) Bill got a $100,000 check which is issued in a U.S. bank from his aunt as gift.
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