Table 29-7.
-Refer to Table 29-7. Assume the Fed's reserve requirement is 10 percent and that the Bank of Springfield makes new loans so as to make its new reserve ratio 10 percent. From then on, no bank holds any excess reserves. Assume also that people hold only deposits and no currency. Then by what amount does the economy's money supply increase?
A)$37,800
B)$18,000
C)$2,000
D)$16,300

Question

Table 29-7. 
-Refer to Table 29-7. Assume the Fed's reserve requirement is 10 percent and that the Bank of Springfield makes new loans so as to make its new reserve ratio 10 percent. From then on, no bank holds any excess reserves. Assume also that people hold only deposits and no currency. Then by what amount does the economy's money supply increase?
A)$37,800 
B)$18,000 
C)$2,000 
D)$16,300

Quizplus · Accepted Answer

The Answer of Table 29-7. 
-Refer to Table 29-7. Assume the Fed's reserve requirement is 10 percent and that the Bank of Springfield makes new loans so as to make its new reserve ratio 10 percent. From then on, no bank holds any excess reserves. Assume also that people hold only deposits and no currency. Then by what amount does the economy's money supply increase?
A)$37,800 
B)$18,000 
C)$2,000 
D)$16,300

Table 29-7. -Refer to Table 29-7. Assume the Fed's Reserve Requirement Is