A commercial bank has $1,000,000 in demand deposits. If the required reserve ratio is 10 percent,...
A commercial bank has $1,000,000 in demand deposits.
If the required reserve ratio is 10 percent, what is the change in
the money supply, assuming the bank loans the maximum it is allowed
to?
Type your answer as a whole number without decimals.
You do not have to use a $ sign.
Homework Answers
New Money supply=Demand Deposits / required reserve ratio
=$1000000/0.10
=$10000000
Change in Money Supply=$(10000000)-(1000000)
=$9000000
Therefore, the change in money supply will be 9000000 without $sign.
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