Suppose you have $12,000 in your checking account. You withdrawl $500 cash from your account and hide it under your pillow for future use. If the required reserve ratio is 10%, then what will be the maximum impact on money supply today today as a reault of your action?
Suppose you have $12,000 in your checking account. You withdrawl $500 cash from your account and hide it under your pillow for future use. If the required reserve ratio is 10%, then what will be the maximum impact on money supply today today as a reault of your action?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose you have $12,000 in your checking
account. You withdrawl $500 cash from your
account and hide it under your pillow for future
use. If the required reserve ratio is 10%, then what
will be the maximum impact on money supply
today today as a reault of your action?
Choose one:
A. There will be no impact on the money supply.
B. The money supply will decrease by $4,500.
C. The money supply will decrease by $450.
D. The money supply will decrease by $500.
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