Question
Help solving this question, please help me on how to do it. Don't give me the answer...
If the banking system has $15,000 of total reserves and a reserve requirement of 20%, the money supply can reach a maximum of
$30,000.
$65,000.
$75,000.
$150,000.
If the banking system has $15,000 of total reserves and a reserve requirement of 20%, the money supply can reach a maximum of
$30,000.
$65,000.
$75,000.
$150,000.
Answers
economyst
Do a little research on the Money Multiplier.
Try here.
http://en.wikipedia.org/wiki/Money_creation
Try here.
http://en.wikipedia.org/wiki/Money_creation
nina
c x 0.20 = 15,000
c x (1/5) = 15,000
c = 15,000 x 5
c x (1/5) = 15,000
c = 15,000 x 5