Assume that Jill deposits $20,000 in cash into her checking account at Welcome National Bank and the central bank has set a requ
ired reserve ratio of 10%. A. Explain the immediate effect of her deposit on the M1 measure of the money supply.
B.If Welcome National Bank holds an additional 10% of her deposit in reserves, calculate the following:
-the maximum amount the bank will loan out
-the maximum increase in the money supply as a result of this transaction