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Bank A has an increase in deposits of $20 million dollars and all bank reserve requirements are 10%. Bank A loans out the full amount of the deposit increase that is allowed. This amount winds up deposited in Bank B. Bank B finds out the full amount possible as well and this amount winds up deposited in Bank C. What is the total increase in deposits resulting from these three banks

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  1. Today, 13:23
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    Total increase in deposit = $54,200,000

    Explanation:

    given data

    deposits = $20 million dollars

    bank reserve = 10%

    solution

    we know that Deposit in bank A is = $20,000,000

    and Reserve @ 10% = $2,000,000

    so

    Bank A loans or bank B deposit will be = $20,000,000 - $2,000,000

    Bank A loans or bank B deposit = $18,000,000

    here Reserve @ 10% = $1,800,000

    so

    Bank B loans or Bank C deposit will be here = $18,000,000 - $1,800,000

    Bank B loans or Bank C deposit = $16,200,000

    so that

    Total increase in deposit will be = Bank A + Bank B + Bank C ... 1

    put here value we get

    Total increase in deposit = $20,000,000 + $18,000,000 + $16,200,000

    Total increase in deposit = $54,200,000
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Home » Business » Bank A has an increase in deposits of $20 million dollars and all bank reserve requirements are 10%. Bank A loans out the full amount of the deposit increase that is allowed. This amount winds up deposited in Bank B.
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