If you take $100 out of your piggy bank and deposit it in your checking account,
ID: 1163568 • Letter: I
Question
If you take $100 out of your piggy bank and deposit it in your checking account, how did M1 change? O$100 O $1000 O It depends on the money QUESTI 10 points Save Answer The banking system can lend more than the sum of its excess reserves because: the money multiplier is of the fractional reserve assets exceed liabilities less than one O there are no leakages QUESTI 10 points Save Answer If the banking system has a required reserve ratio of 10 percent, then the money multiplier is: 10 QUESTI 10 points Save Answer Suppose a bank has $200,000 in deposits and a required reserve ratio of 10 percent O If there are no leakages how much it can the money supply increase? 10 $20,000 $200,000 $2,000,000Explanation / Answer
1.
If $100 is withdrawn from checking account then M1 would change by $100 as M1 is the currency with public and demand deposit in banks.
the correct option is (b)
2.
The banking system can lend more than the sum of excess reserves because of the fractional reserve system. As excess reserves are reserves held by banks apart from required reserves set by central bank authorities.
the correct option is (b)
3.
If the required reserve ratio is 10% then money multiplier is 1/ required reserve ratio.i.e.10
the correct option is (c)
4.
the bank has the deposit of $200,000 and required reserve of 10% and no leakage. money multiplier will be 10 than $2,000,000 will increase in money supply
the correct option is (d)