Question

Suppose you have $10000 in your checking account. you withdraw $500 cash from your account and hide it under your pillow for future use. if the required reserve ratio is 10%, then what will be the maximum impact on money supply today as a result of your action? choose one:
a. the money supply will decrease by $4500.



b. the money supply will decrease by $450.



c. the money supply will decrease by $500.



d. there will be no impact on the money supply.

Answer 1

Answer:

100%

Explanation:

the money would decrease to 4500$ and the ratio of 500 is 10% so its maximum would be 100% that is 10000$