Table 29-6.
-Refer to Table 29-6. Assume the Fed's reserve requirement is 5 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 5 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Pleasantville decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase?
A)$10,833.33.
B)$13,000.
C)$8,333.33.
D)$10,000.

Question

Table 29-6. 
-Refer to Table 29-6. Assume the Fed's reserve requirement is 5 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 5 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Pleasantville decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase?
A)$10,833.33. 
B)$13,000. 
C)$8,333.33. 
D)$10,000.

Quizplus · Accepted Answer

The Answer of Table 29-6. 
-Refer to Table 29-6. Assume the Fed's reserve requirement is 5 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 5 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Pleasantville decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase?
A)$10,833.33. 
B)$13,000. 
C)$8,333.33. 
D)$10,000.

Table 29-6. -Refer to Table 29-6. Assume the Fed's Reserve Requirement Is