You take 150 you had kept under your mattress and deposit it in the bank account. Supposed this $150 stay in the banking system as reserves and bank hold reserves equals to 12.5 percent of deposit. The total amount of deposit in the bank system increased by what and the supply increase by what

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Business

Big Bird

21 May, 03:45

You take 150 you had kept under your mattress and deposit it in the bank account. Supposed this $150 stay in the banking system as reserves and bank hold reserves equals to 12.5 percent of deposit. The total amount of deposit in the bank system increased by what and the supply increase by what

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Answers (2)

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Ayana Kent · Answer 1

The answer is $12.

Using the formula total credit / Money created = Total deposit / Cash reserve ratio

Total deposit = $150

Cash reserve ratio = 12.5%

150/12.5

=12

Therefore, the total money created in the banking system is $12. From the above, it could be rightly said that creation of money by banks is a process whereby the banks received deposit from customers and give the deposit to borrowers in the form of loan after deducting cash or reserve ratio.

Sincere May · Answer 2

The system of saving money in a bank will increase with the Interest System

Explanation:

Where the interest system will increase the number of deposits on condition that the number of deposits and the period of deposits. The higher the amount of your savings and the longer the period of your deposits, then more the number of deposits will increase with the stipulation of a few percent. For example 12.5 percent every year. Then 150 dollars saved for a year in a bank with 12.5 percent interest will be 150 + 18.75 (12.5% bank interest) = 168.75 dollars.

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