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Eduardwww [97]
3 years ago
11

Suppose that you take $150 in currency out of your pocket and deposit it in your checking account. If the required reserve ratio

is 8%, what is the largest amount (in dollars) by which the money supply can increase as a result of your action
Business
1 answer:
nexus9112 [7]3 years ago
6 0

Answer:

The answer is $1,875

Explanation:

Money multplier effect = 1 / required reserve ratio .

And the required reserve ratio is 8 percent

Deposit into the checking account is $150.

Money multplier effect = 1 / 0.08

12.5

Therefore, the largest amount (in dollars) by which the money supply can increase as a result of the deposit of $150 is:

12.5 x $150

=$1,875

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