Answer:
Amount of credit created by commercial bank = 47,840
Explanation:
Given:
Total deposit in bank = 80,000
Reserve requirement = 8%
Withdrawal = 35%
Find:
Amount of credit created by commercial bank
Computation:
Amount available for withdrawal = Total deposit in bank[1 - Reserve requirement]
Amount available for withdrawal = [80,000][1-8%]
Amount available for withdrawal = 73,600
Amount of withdrawal = Amount available for withdrawal[35%]
Amount of withdrawal = 73,600[35%]
Amount of withdrawal = 25,760
Amount of credit created by commercial bank = 73,600 - 25,760
Amount of credit created by commercial bank = 47,840
