Question

Suppose that the public holds 50% of the money supply in currency, that the reserve requirement is 20%, and that banks hold no excess reserves. If a customer deposits $6,000 in her checking account, required reserves will increase by:

Answer 1

The required reserves will be increased by $4,800 if the customer deposits the amount of $6,000.

What is meant by deposits?

Deposits are the amount that the customers put in their savings accounts opened with the banks.

Given values:

Deposited amount: $6,000

Reserve ratio: 20%

Computation of increase in required reserves:

$\rm\ Increase \rm\ in \rm\ Required \rm\ Reserves=\rm\ Customer \rm\ deposits \times\ (100\%-\rm\ Reserve \rm\ Ratio)\\\rm\ Increase \rm\ in \rm\ Required \rm\ Reserves=\ 6,000 \times\ (100\%-20\%)\\\rm\ Increase \rm\ in \rm\ Required \rm\ Reserves=\ 4,800$

Therefore, the amount of $4,800 will increase the required reserves on the deposit of $6,000 by the customer.

Learn more about the deposits in the related link:

https://brainly.com/question/14303353

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