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In december 1994 a man in ohio decided to deposit all of the 8 million pennies he had been saving for nearly 65 years. (his deposit weighed over 48,000 pounds!) with a reserve requirement of 5 percent, how did his deposit change the lending capacity of (a) his bank? $ 76,000 (b) the banking system? $

Respuesta :

jorel1380
8,000,000 pennies equals $80,000. 1/.05=20
20 x $80,000=$1,600,000 more that the bank was able to lend
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The change in the lending capacity at his bank is $76,000.

The change in the lending capacity in the banking system is $1,600,000.

What is the total change?

Reserve requirement is the percentage of deposits that must be kept as reserves with the Central bank.

The change in the lending capacity at his bank = (1 - reserve requirement) x amount deposited in dollars

(1 - 0.05) x (8 million pence x 0.01)

0.95 x 80,000 = $76,000

The change in the lending capacity in the banking system = amount deposited in dollars / reserve requirement

80,000 / 0.05 = $1,600,000

To learn more about multiplication, please check: https://brainly.com/question/3385014

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