An economy starts with $50,000 in currency. All of this currency is deposited into a single bank, and the
bank then makes loans totaling $45,750. The T-account of the bank is shown below.
Assets
Liabilities
Reserves
Loans
$4,250 Deposits $50,000
45,750
a. 17.5percent.
b. 8.5percent.
c. 91.5percent.
d. 100 percent
8. Refer to the above Table. The bank's reserve ratio is
9. Refer to the above Table. If all banks in the economy have the same reserve ratio as this bank, then the
value of the economy's money multiplier is
a.9.33.
b.1.09.
c.10.76.
d.11.76.
10. Refer to the above Table. If all banks in the economy have the same reserve ratio as this bank, then
an increase in reserves of $150 for this bank has the potential to increase deposits for all banks by
a.$287.25.
b.$1,614.71.
c.$1,764.71.
d.$2,000 or more.