Assume the reserve requirement is 10%. first national bank receives a deposit of $5,400. if there is no slippage, how much could the money supply expand?

$4,860 The reserve requirement is the percentage of deposits that the bank has to keep on reserve to handle withdraws. So in this case, with a deposit of $5,400, the bank is required to increase its reserve by 10% of the deposit, or $540. That leaves the bank free to loan out the remaining $5,400 - $540 = $4,860 to other people or organizations.

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