Question
uppose people hold $500 million of currency, total checking deposits in the commercial banking system are $2,500 million, and commercial bank reserves (held at the
uppose people hold $500 million of currency, total checking deposits in the commercial banking system are $2,500 million, and commercial bank reserves (held at the Federal Reserve) are $500 million. Further, assume that commercial banks do not hold excess reserves. In this case, the required reserve ratio is
5%
10%
20%
25%
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Suppose the required reserve ratio is 10 percent, and banks hold no excess reserves at the Federal Reserve. If an individual deposits $10 million at BankOne, then
the total amount of loans and bonds at BankOne must increase by $1 million.
the total amount of loans and bonds at BankOne must increase by $9 million.
the total amount of loans and bonds at BankOne must increase by $10 million.
the total amount of loans and bonds at BankOne must increase by $11 million.
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