Refer to the information provided in Scenario 25.1 below to ...

[craiczarry]

Question 1

As commercial banks keep more excess reserves, money creation

◦ increases.
◦ decreases.
◦ remains the same.
◦ could either increase or decrease.

Question 2

Refer to the information provided in Scenario 25.1 below to answer the question(s) that follow.



SCENARIO 25.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up.










Refer to Scenario 25.1. What is the required reserve ratio?

◦ 4%
◦ 5%
◦ 8%
◦ 10%

[shailee]

Answer 1

decreases.

Answer 2

5%

[craiczarry]

Thanks

[shailee]

Welcome

[V@ndy87]

Question 1

Refer to the information provided in Scenario 25.1 below to answer the question(s) that follow.



SCENARIO 25.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up.










Refer to Scenario 25.1. What is the money multiplier in this economy?

◦ 10
◦ 16.67
◦ 20
◦ 50

Question 2

Refer to the information provided in Scenario 25.1 below to answer the question(s) that follow.



SCENARIO 25.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up.










Refer to Scenario 25.1. Based on the initial $100,000 deposit, the money supply will, at most, expand to

◦ $1 million.
◦ $2 million.
◦ $16.67 million.
◦ $50 million.

[jennafosdick]

Answer 1

20

Answer 2

$2 million.