For each answer below, enter your answer below in terms of millions of dollars (e.g., write 2 for $2,000,000). Round to the nearest dollar and don't forget a negative sign if necessary! Suppose a bank with a 10% reserve requirement has $10 million in reserves and $100 million in checkable deposits, when a major corporation makes a deposit of $1 million. What is the maximum amount the money supply may change by as a result? Maximum possible change in money supply = $ million Suppose the bank instead faces a 20% reserve requirement. What is your new answer? Maximum possible change in money supply = $ million
For each answer below, enter your answer below in terms of millions of dollars (e.g., write 2 for $2,000,000). Round to the nearest dollar and don't forget a negative sign if necessary! Suppose a bank with a 10% reserve requirement has $10 million in reserves and $100 million in checkable deposits, when a major corporation makes a deposit of $1 million. What is the maximum amount the money supply may change by as a result? Maximum possible change in money supply = $ million Suppose the bank instead faces a 20% reserve requirement. What is your new answer? Maximum possible change in money supply = $ million
Chapter14: Banking And The Money Supply
Section: Chapter Questions
Problem 2.3P
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