Jeremiah Deposits in a Bank an Amount of $5000 That

question 161

Essay

Jeremiah deposits in a bank an amount of $5000 that he had been holding at home in a jar for a long time.
a. If the banking system is 100 percent reserve, how does the money supply change?
b. If the reserve requirement is 20 percent and the bank holds no excess reserves, how does the money supply change?
c. If the reserve requirement is 20 percent and the bank holds an excess reserve of 2 percent, how does the money supply change?

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Definitions:

Depressant

A drug that lowers the rate of activity of the nervous system.

Stage 1 Sleep

The initial phase of sleep that is light and easily disrupted, serving as a transition from wakefulness to deeper sleep stages.

Rapid Eye Movement

A phase of sleep characterized by the random movement of the eyes, dreaming, and increased brain activity.