Suppose That American Citizen Bank Receives $10,000 in New Money

question 97

Essay

Suppose that American Citizen Bank receives $10,000 in new money in the form of a checking account.Calculate the amount of money the banking system can create under each of the following scenarios:
(a)The reserve ratio is 10% .
(b)The reserve ratio is 20%.

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Definitions:

Courtesy

Politeness and respectful behavior towards others.

Clearness

Refers to the quality of being easily understandable or free from ambiguity.

Confidence

The belief in one's abilities or qualities, ensuring self-assurance in one's actions and decisions.

Correctness

Adherence to accuracy, truth, or what is considered right or appropriate in a particular context.