Author Question: Suppose that someone deposits 10,000 into a bank. Assuming a reserve requirement ratio of 20 ... (Read 91 times)

bclement10 · **on:** Jun 30, 2018

Suppose that someone deposits 10,000 into a bank. Assuming a reserve requirement ratio of 20 percent, what will be the eventual increase in checking account balances?

What will be an ideal response?

Question 2

If consumer preference for a product increases, this will cause the equilibrium price of the product to go down, and the equilibrium quantity of the product to go u

Indicate whether the statement is true or false

mathjasmine · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

The short way to figure this out is to multiply the initial cash deposit amount by the reciprocal of the reserve ratio (the money multiplier). Therefore, the eventual increase in account balances will be 50,000.

Answer to Question 2

FALSE