How Banks Create Money
In a fictitious country, the reserve requirement is 5%. One person decides to deposit $10,000 into a bank. This bank does not hold excess reserves.
a. How much additional money is created from the initial bank making it's first loan?
b. After this new loan is deposited into a bank account, how much is turned into new loans?
c. How much money is created from this initial deposit?
How Banks Create Money In A Fictitious Country The Reserve Requirement Is 5 One Person Decides To Deposit 10 000 Int 1 (16.23 KiB) Viewed 11 times
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