Business, 21.12.2021 19:20 whosdarrin9396
A stranger arrives from outside a given economic system with $1,000 of acceptable currency that has never been in the system before. The nation's banking system is governed by a central bank that has set a reserve requirement of 10 percent.
a. Assume the stranger deposits the $1,000 in a local bank. Explain the impact of this deposit on each of the following:
1. The change in the dollar value of the local bank's reserves.
2. The maximum possible change in the dollar value of the local bank's loans.
3. The maximum possible change in the dollar value of the total money supply.
b. State TWO factors in the real world that might cause this change in the money supply to be less than the maximum possible change.
Answers: 1
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A stranger arrives from outside a given economic system with $1,000 of acceptable currency that has...
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