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scoundrel [369]
3 years ago
11

Suppose you have $10,000 in your checking account. You withdraw $500 cash from your account and hide it under your pillow for fu

ture use. If the required reserve ratio is 10%, what will be the maximum impact on money supply today as a result of your action?
Business
1 answer:
trapecia [35]3 years ago
8 0

Answer:

The Money supply will decrease by $4,500

Explanation:

What will be the maximum impact on money supply today as a result of your action is that the Money supply will decrease by $4,500.

Since we assumed that you have $10,000 in your account in which you withdraw $500 cash from your account and hide it under your pillow for future use, therefore based this scenario or actions carried by you it means that your bank have fewer or lesser funds available to make loans which means the decrease will tend to affect the money supply.

Hence, you can easily calculate the effect by using the simple money multiplier.

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3 years ago
If interest rates increase from 9 percent to 10 percent, a bank with a duration gap of 2 years would experience a decrease in it
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The duration gap is calculated by subtracting the duration of the liabilities from the duration of the activity of the financial entities. Thus, in this case, the net worth of  1.8 percent of its assets.

<h3>What do you mean by Duration Gap?</h3>

Duration Gap refers to the term used by funds, banks, pensions, or many financial institutions to estimate the risk because of changed interest rates.

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brainly.com/question/7276068

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