7.Yesterday Bank A had no excess reserves. Today it received a new deposit of $ 4,000. a. If the bank maintains a reserve requirement of 2 percent, what is the maximum loan that Bank A can make? b.What is the maximum amount by which the money supply can be increased as a result of Bank A’s new loan?
Chapter 12
7.Yesterday Bank A had no
a. If the bank maintains a reserve requirement of 2 percent, what is the maximum loan that Bank A can make?
b.What is the maximum amount by which the money supply can be increased as a result of Bank A’s new loan?
Use the following table on the components of money in a hypothetical economy
Money Component Amount
Traveler’s checks $ 100
Currency $ 2,500
Small-denomination time deposits $ 2,500
Savings deposits $ 6,000
Demand deposits $ 5,000
Other checkable deposits $ 9,000
Retail
11.What is the value of M1 in the preceding table?
12.What is the value of M2 in the preceding table?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
