Answer:
The change in money supply amounts to $7,084,248
Explanation:
Computing the change in money supply as:
Using the multiplier as:
Multiplier = 1 / Required reserve ratio
where
Required reserve ratio is 0.220
So,
Multiplier = 1 / 0.220
Multiplier = 4.54
So, the new money supply would be:
= Multiplier × Old money supply
where
old money supply is $2,001,200
Multiplier is 4.54
So,
= 4.54 × $2,001,200
= $9,085,448
Therefore, change in money supply is:
Change in money supply = $ 9,085,4448 - $2,001,200
Change in money supply = $7,084,248
