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Jia Chong deposits RM50,000 with Bank A. Assume that the required reserves are 10 percent of checking deposits, banks hold no excess reserves and households
Jia Chong deposits RM50,000 with Bank A. Assume that the required reserves are 10 percent of checking deposits, banks hold no excess reserves and households hold no currency.
(a) Draw a simple T-account for the first three banks. Make sure your balance sheet balances. (6 marks)
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(b) Calculate the size of money multiplier. (2 marks)
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(c) Calculate the total money supply. (2 marks)
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