reserve requirement is 10%. First National Bank receives a deposit of $5,400. If there is no slippage, how much could the money

Question

Pie

4 years ago

5

reserve requirement is 10%. First National Bank receives a deposit of $5,400. If there is no slippage, how much could the money

supply expand

Mathematics

1 answer:

S_A_V [24] · Answer 1 · 2021-11-23T21:47:06+03:00

It can expand by 48600.
By depositing 5400 this represents the 10 percent that needs to be reserved. multiply 5400 by 10 to get 100 percent that could be loaned or created. 54000 subtract the initial 10 percent of 5400 to get 48600 difference or new money that could be created.