Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%. As a result of Kristy’s deposit,a) Bank A's reserves immediately increase by $______.b) Bank A's required reserves increase by $______.c) Bank A’s excess reserves increase by $______.d) Bank A can make a maximum new loan of $______.e) Checking account deposits in the banking system as a whole (including the original deposit) could eventually increase up to a maximum of $______.

Respuesta :

Answer:

The answers ares stated below

Explanation:

(1) New deposit = $10,000.

(a) Bank A's reserves increase by $10,000

(b) Bank A's required reserves increase by $10,000 x 20% = $2,000

(c) Bank A's excess reserves increase by $(10,000 - 2,000) = $8,000

(d) Bank A can make a loan of maximum $ 8,000 (Only the excess reserve component).

(e) Deposits will increase a maximum of (Initial deposit / Required reserve ratio) = $10,000 / 0.2 = $50,000