Question

If the reserve requirement is 20 percent and Acme Laundromat deposits $10,000 cash in the banking system, the total change in the money supply after all rounds of lending are completed is ________. g

Answer 1

Answer:

Bank to loan = $8,000

Explanation:

Given:

Amount bank had = $10,000

Reserve requirement = 20%

Find:

Change in money supply

Computation:

Bank to loan = $10,000 (100% - 20%)

Bank to loan = $10,000 (80%)

Bank to loan = $8,000