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As soon as you receive your first paycheck, you go to the local bank and open a checking account. You like that the bank only
As soon as you receive your first paycheck, you go to the local bank and open a checking account. You like that the bank only makes loans within the community because it wants to promote local economic growth. While at the bank, your personal banker encourages you to also open a savings account. Since your paycheck will more than cover your daily expenses, you agree that opening a savings account is a good idea. When opening the savings account with $10,000, your personal banker smiles and tells you that the bank operates on a 5% reserve. That means a portion will be lent out to other customers, which will benefit the community. What is the money multiplier effect of your original deposit? a $10,000, which is the amount of your deposit, b. 59,500, which is 510,000 times the 95% that is not reserved C5500, which is 510,000 times the reserve rate of 5% d. $200.000, which is 510,000 divided by the reserve rate of 5%
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