Question

if the federal reserve deceases the reserve rate from 5% to 2%, how does this affect the amount of money that would result because of fractional reserve banking from an initial deposit into a bank of 25,000

Answer 1

25,000÷0.05
=500,000

25,000÷0.02
=1,250,000
increased by
1,250,000−500,000
=750,000