Essay
Heather receives a payment in cash of $400 and she deposits it in a bank.
a. If the banking system is 100 percent reserve, how does the money supply change?
b. If the reserve requirement is 10 percent and the bank holds no excess reserve, how does the money supply change?
c. If the reserve requirement is 10 percent and the bank holds an excess reserve of 2 percent, how does the money supply change?
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a. Since the $400 had been in circulatio...View Answer
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