When $100 is deposited in the banking system, it leads to maximum expansion in bank deposits of $1,000. What is the required reserve ratio assuming that the excess reserves are 0 Question 7 options: 10% 5% 0% 20%

When $100 is deposited in the banking system, it leads to maximum expansion in bank deposits of $1,000. What is the required reserve ratio assuming that the excess reserves are 0 Question 7 options: 10% 5% 0% 20%

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter19: Money Creation

Section: Chapter Questions

Problem 7SQ

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Question

When $100 is deposited in the banking system, it leads to maximum expansion in bank deposits of $1,000. What is the required reserve ratio assuming that the excess reserves are 0

Question 7 options:

	10%
	5%
	0%
	20%

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

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a) Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into your hands. What are the minimum increase and the maximum increase in the money supply that may result? Assume the required reserve ratio is 10 percent.b) Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not?c) Suppose that instead you getting Tk. 10,000 from the sky or a check through your grandmother, you get the money from your mother who had buried it in a can in her backyard. In this case, would the maximum increase in the money supply be what you found it to be in part a)? Why or why not?
a) Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into your hands. What are the minimum increase and the maximum increase in the money supply that may result? Assume the required reserve ratio is 10 percent.b) Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not? c) Suppose that instead you getting Tk. 10,000 from the sky or a check through your grandmother, you get the money from your mother who had buried it in a can in her backyard. In this case, would the maximum ncrease in the money supply be what you found it to be in part a)? Why or why not?
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When $100 is deposited in the banking system, it leads to maximum expansion in bank deposits of $1,000. What is the required reserve ratio assuming that the excess reserves are 0 20% 10% 5% 0%