Question

Concept: Change in Checking Deposits Show Work Question Help Suppose you deposit ​$1 comma 8001,800 cash into your checking account. By how much will checking deposits in the banking system increase as a result when the required reserve ratio is 0.22​0? The change in checking deposits is equal​ to?

Answer 1

Answer:

$8,181.81

Explanation:

Data provided in the question:

Amount deposited in the checking account = $1,800

Required reserve ratio = 0.220

Now,

Change in the checking deposits is calculated as:

⇒ ( Amount deposited ) × ( Money multiplier )

also,

Money multiplier = $\frac{\textup{1}}{\textup{Reserve ratio}}$

or

⇒ Money multiplier = $\frac{1}{0.220}$

or

⇒ Money multiplier = 4.54

Therefore,

Change in money supply = $1,800 × 4.54

or

⇒ Change in money supply = $8,181.81