Question
Assume all money is held as demand deposits and the required reserve ratio is 8%. Also assume that banks will expand loans and deposits until
Assume all money is held as demand deposits and the required reserve ratio is 8%. Also assume that banks will expand loans and deposits until the excess reserves are zero. What will be the increase in money supply for a $10 million increase in the reserves? [Hint: REQ = 0.08]
| a. $80 million
| ||
| b. $90 million
| ||
| c. $120 million
| ||
| d.$125 million |
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Multinational Corporate Strategy And Finance
Authors: Phil Molyneux
1st Edition
1845160614, 978-1845160616
