Suppose you win on a scratch-off lottery ticket and you decide to put all of your $2,500 winnings in the bank. The reserve requirement is 10%. What is the maximum possible increase in the money supply as a result of your bank deposit? maximum increase: $ 250 Incorrect Which events could cause the increase in the money supply to be less than its potential? Banks choose to loan out all excess reserves. Banks decide to keep some excess reserves on hand. Some loan recipients choose to hold some cash instead of depositing all of it in banks. All money loaned out is deposited back into the banking system.
Suppose you win on a scratch-off lottery ticket and you decide to put all of your $2,500 winnings in the bank. The reserve requirement is 10%. What is the maximum possible increase in the money supply as a result of your bank deposit? maximum increase: $ 250 Incorrect Which events could cause the increase in the money supply to be less than its potential? Banks choose to loan out all excess reserves. Banks decide to keep some excess reserves on hand. Some loan recipients choose to hold some cash instead of depositing all of it in banks. All money loaned out is deposited back into the banking system.
Chapter13: Monetary Policy
Section: Chapter Questions
Problem 8E
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Transcribed Image Text:Suppose you win on a scratch-off lottery ticket and you decide to put all of your $2,500 winnings in the bank. The reserve
requirement is 10%.
What is the maximum possible increase in the money supply as a result of your bank deposit?
maximum increase: $
250
Incorrect
Which events could cause the increase in the money supply to be less than its potential?
Banks choose to loan out all excess reserves.
Banks decide to keep some excess reserves on hand.
Some loan recipients choose to hold some cash instead of depositing all of it in banks.
All money loaned out is deposited back into the banking system.
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