Question
Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into your hands. What are the minimum increase and the
Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into
your hands. What are the minimum increase and the maximum increase in the money supply that
may result? Assume the required reserve ratio is 10 percent.
b) Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving
account. your grandmother gave you the money by writing a check on her saving account. Would
the maximum increase in the money supply still be what you found it to be in part a) where you
received the money from the sky? Why or why not?
c) Suppose that instead you getting Tk. 10,000 from the sky or a check through your
grandmother, you get the money from your mother who had buried it in a can in her backyard. In
this case, would the maximum increase in the money supply be what you found it to be in part a)?
Why or why not?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started