Please give the answer only you are 100%sure. And show the results clearly. Than
ID: 1115605 • Letter: P
Question
Please give the answer only you are 100%sure. And show the results clearly. Thanks ou need to briefty show how to get the results. Use a separate sheet for your anwers New Deposit Required Reserves Bank $10,000 58 Bank B Bank Assume all excess reserves are loaned out 1. What is the reserve requirement ratio? 2. With the reserve requirement ratio from your answer to 1, what is the total increase in the money supply as a result of the initial deposit of $10,000 in Bank A? 3. If the reserve requirement is changed to 0.1, the required reserve for Bank A would be equal t 4. If the reserve requirement is changed to 0.1, what is the total increase in the money supply as a resulh of the initial deposit of $10,000 in Bank A? you will see from your answers 2 and 4 that money supply increase more as RRR decrease)Explanation / Answer
1. Reserve requirement ratio = Required reserve / Total deposits x 100 = 2000/10,000 x 100 = 20%
2. Increase in money supply = Deposit x Money multiplier = 10,000 x 1/Reserve requirement ratio
= 10,000 x 1/0.20 = $ 50,000
3. Required reserve of Bank A = 10,000 x Required reserve ratio = 10,000 x 0.1 = $ 1000
4. Increase in money supply = 10,000 x 1/0.1 = 10,000 x 10 = $ 100,000