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Sonbull [250]
3 years ago
15

Suppose the Imperial Galactic Bank has received $1,000 of deposits and all banks face a required reserve ratio of 10 percent. Wh

at is the maximum amount of money supply that can be created with this deposit if the Imperial Galactic Bank holds on to $100 of excess reserves (assume it is the only bank in the money supply process that holds on to excess reserves) and no one holds on to cash?
Business
1 answer:
Bumek [7]3 years ago
4 0

Answer:

Money Multiplier= 1/ reserve ratio = 1/10% = 10

Change in Money Supply = Change in Reserves * Money Multiplier

= 1,000 * 10 = 10,000

So, option d is the correct option.

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