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12 October, 10:21

Assume that $1 million is deposited into a bank with a reserve requirement of 15 percent. The value of the money multiplier is 6.67.

What is the maximum change in money supply as a result of this deposit? (Round your answer to two decimal places.)

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  1. 12 October, 12:12
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    maximum change in money supply is $6.67 million

    Explanation:

    given data

    deposit = $1 million

    reserve requirement = 15%

    money multiplier = 6.67

    to find out

    maximum change in money supply

    solution

    we know here money multiplier is given = 6.67

    so maximum change in money will be

    maximum change = deposit * money multiplier

    put here value

    maximum change = $1 million * 6.67

    maximum change = $6.67 million

    so maximum change in money supply is $6.67 million
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