Homework Answers
The increase in the deposit in the checking account= $19000
Required Reserve Ratio= 0.07
Money Multiplier= 1/ Required Reserve Ratio= 1/0.07= 14.29.
The maximum amount that the bank can lend out= money multiplier × the increase in the deposit in the checking account
The Maximum amount that the bank can lend out= 14.29×19000= $271510
The maximum amount that the bank can lend out= $271510
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