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dusya [7]
3 years ago
5

After saving money in her piggy bank for 3 years, Beverly decided to deposit $5,000 of the money in the Millertown Bank. If the

bank were fully "loaned out" and the required reserve ratio were 20%, then the maximum change in the money supply due to this deposit would be $25,000. $20,000. $5,000. $4,000. $1,000.
Business
1 answer:
JulijaS [17]3 years ago
5 0

Answer:

$25,000

Explanation:

The computation of the maximum change in money supply is shown below:

= Deposit amount × money multiplier

= $5,000 × 5

= $25,000

Where, money multiplier is

= 1 ÷ required reserve ratio

= 1 ÷ 20%

= 5

So by multiplying with the deposit amount with the money multiplier we can get the maximum change in the money supply

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Answer:

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