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:

Sampling Error

Differences between statistics calculated from a sample and statistics pertaining to the population from which the sample is drawn due to random, chance factors.

Confidence Interval

A sequence of values, from sample statistic studies, expected to encase the value of a population characteristic not yet revealed.

Confidence Interval

A spectrum of numbers obtained from sample observations which is expected to include the value of an unidentified population parameter, given a certain confidence degree.

Confidence Interval

A range of values within which there is a specified probability that the true parameter value lies.