48. If the required reserve ratio is 10 percent, what is the maximum change in the money supply from John's deposit of $50,000 cash into his checking account? (A) $5,000 (B) $45,000 (C) $55,000 (D) $450,000 (E) $500,000
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The required reserve ratio is the fraction of deposits that banks are required to keep on hand and not lend out. In this case, the required reserve ratio is 10 percent. This means that for every dollar deposited into a bank, the bank must keep 10 cents as reserves Show more…
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