Assume that a bank receives a deposit of $1,000 in cash, puts aside $200 as required reserves, and makes a loan of $800, these transactions imply that: a) the money supply by the whole banking system can increase by $1,000. b) the money supply by the whole banking system can increase by $4,000. c) the money supply by the whole banking system can increase by $8,000.
Assume that a bank receives a deposit of $1,000 in cash, puts aside $200 as required reserves, and makes a loan of $800, these transactions imply that: a) the money supply by the whole banking system can increase by $1,000. b) the money supply by the whole banking system can increase by $4,000. c) the money supply by the whole banking system can increase by $8,000.
Chapter12: Money And Banking
Section: Chapter Questions
Problem 9E
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Assume that a bank receives a deposit of $1,000 in cash, puts aside $200 as
- a) the money supply by the whole banking system can increase by $1,000.
- b) the money supply by the whole banking system can increase by $4,000.
- c) the money supply by the whole banking system can increase by $8,000.
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