Question

December 1994 a man in ohio deposited all of the 8 million pennies
He had been saving for 65 year(his deposit weghed 48000 pounds)
with reserve requirement of 55 what will be the cumulative change
to the baking system?
a)transaction deposit
b)Total reserves
c)lending capacity

if the saved the same number every year hpw much did he loose by not depositing in and intrest account at 5%

I find your reserve requirement of 55 highly unusual.

The money multiplier is 1/rr. So the initial transaction deposit of $80000 will translate into 80,000*(1/.55). Reserves will be 55% of his. Initial lending capacity started at 80,000*.45, but will eventially go to zero.

Use a spreadsheet for part b. Assume a zero tax rate. (or positive rate, the spreadsheet will handle the calculations equally well).


thank you "big kiss"