In 2008, the required reserve ratio for a bank's first $9.3 million in checking account deposits was zero. It was 3 percent o

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In 2008, the required reserve ratio for a bank's first $9.3 million in checking account deposits was zero. It was 3 percent o

n deposits between $9.3 million and $43.9 million, and 10 percent on deposits above $43.9 million. In most cases, and for simplicity, we assume that the required reserve ratio is 10 percent on all deposits. Therefore, the simple deposit multiplier is 10. Is the real-world deposit multiplier greater than, less than, or equal to the simple deposit multiplier?

Business

1 answer:

Greeley [361] · Answer 1 · 2022-05-16T17:58:31+03:00

Answer:

In most cases the deposits have a reserve ratio of 10% but in some cases the ratio is 0% and 3%, both these numbers are lower than 10. This means that in most cases the ratio is 10% and in some cases the ratio is less than 10 % so the real word deposit multiplier will be less than 10.

Explanation:

In​ 2008, the required reserve ratio for a​ bank's first​ $9.3 million in checking account deposits was zero. It was 3 percent o

In 2008, the required reserve ratio for a bank's first $9.3 million in checking account deposits was zero. It was 3 percent o