Macroeconomics question

Posted on 2014-04-04 11:00:00 in Economics by SMEX

Suppose Alex 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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