Assume that the reserve requirements ratio is 15%. An initial injection of $150 million could result...
Assume that the reserve requirements ratio is 15%. An initial injection of $150 million could result in a maximum change in the money supply of ___.
Homework Answers
Answer: Step 1-
Money multiplier = 1 / Reserve ratio
Money multiplier = 1 / .15
Money multiplier = 6.67
Step 2-
Change in the money supply = Change in reserve * Money multiplier
Maximum change in the money supply: $150* 6.67 = $1000.50 Million
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