If the reserve requirement for demand deposits is 10 percent, what is the maximu
ID: 2699598 • Letter: I
Question
If the reserve requirement for demand deposits is 10 percent, what is the maximum change in the money supply that the banking system can create if
a.
the Federal Reserve puts $1,000,000 of new reserves in the banking system
b.
$1,000,000 in cash is deposited in checking accounts
c.
IBM borrows $1,000,000 from an insurance company?
Need answers for a,b,and c
a.
the Federal Reserve puts $1,000,000 of new reserves in the banking system
b.
$1,000,000 in cash is deposited in checking accounts
c.
IBM borrows $1,000,000 from an insurance company?
Need answers for a,b,and c
Explanation / Answer
Answer
b)