1. In a bank's business operations, at what point does the money supply increase? (Banks create money; at which point in the bank's activities is the money supply increased?) 2. When (in connection with a bank) does the money supply (M1) shrink? 3. Mary V deposits $100,000 in her bank, Bank A. If the Required Reserve Ratio is 1/10, and Bank A had no excess reserves to start with, how much can it now lend out?
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1. In a bank's business operations, at what point does the money supply increase? (Banks create money; at which point in the bank's activities is the money supply increased?)
2. When (in connection with a bank) does the money supply (M1) shrink?
3. Mary V deposits $100,000 in her bank, Bank A. If the
4. If the Required Reserve Ratio (RRR) is 1/10, all banks except one have no excess reserves to start with, one bank has $10,000 in initial excess reserves, what is the maximum amount by which the banking system as a whole may increase the money supply (assuming all excess reserves are lent out (this is a money multiplier question)?
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4. If the
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