1-Suppose you deposite $100 cash into your checking account.Assume the reserve r

Question

1-Suppose you deposite $100 cash into your checking account.Assume the reserve reqirement is 12 percent.

A-what is the effect on your bank's reserves?

B-what is the effect on your bank's required reserves?

C-What is the effect on your bank's excess reserves?

D-by how much is your bank now able to expand its loans?

3-you find $1000 worth of old coins while you are mountain climbing in Colorado.You promptly deposit the coins in your Checking account. if the reserve requirement is 10%, how much money did you ultimately create?

Explanation / Answer

A) increases
B) increases
C) increases
D) by $12

3) $900 is created

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