Question

The Economy Tomorrow Suppose a person who is developing an app crowdfunds $15,000 and holds this as cash for future expenses. If this $15,000 comes from donors' checking accounts, by how much will the money supply fall if the reserve ratio is 20 percent? Instructions: Enter your response as a whole number. The money supply will decrease by $ .

Answer 1

Answer:

Question 1)

Decrease in money supply = Decrease in checking account / Required reserves ratio

Decrease in money supply = $25,000 / 0.05

Decrease in money supply = $500,000

NOTE: As per Answering Policy, first question is answered.

Explanation:

Question 1)

Decrease in money supply = Decrease in checking account / Required reserves ratio

Decrease in money supply = $25,000 / 0.05

Decrease in money supply = $500,000

NOTE: As per Answering Policy, first question is answered.