If the required reserve ratio is 8% and President Obama deposits 10,000,000 million dollars, by how...

Question

Question

If the required reserve ratio is 8% and President Obama deposits 10,000,000 million dollars, by how much will the money supply expand?

business economics

Answer 1

Answer #1

Answer

Money multiplier =1/reserve ratio

=1/0.1

=10

the money supply expand=multiplier * deposits

=10*10,000,000

=100,000,000

The money supply increases by 100,000,000 million

Answer 2

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