1. If a bank has a required reserve ratio of 25% and you put $500 cash...

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1. If a bank has a required reserve ratio of 25% and you put $500 cash that you have had in the cookie jar into a checking account at the bank, how much of that cash can the bank loan out to a borrower? 2. If the bank does loan out that the cash that you answered in #1, and the borrower takes the loan in cash and walks out the door with it in her pocket, how much has the money supply risen compared to what it was before you put the cash in your checking account. Answer in a dollar amount, not a percent. Note the questions is asking for the increase in the money supply, not what the money supply is. 3. Suppose the borrower puts the borrowed cash back into the bank in the form of a checking account for herself. And suppose the bank always loans out the maximum they can, and that everyone who borrows the money always puts it all back in their own new checking account. What will be the dollar amount of checking accounts that exist at the bank before the bank has to stop re-loaning out any of the money? 4. So what is the increase in the money supply from you depositing $500 cash in your checking account in this situation? Answer in a dollar amount, not a percent. Again note the questions is asking for the increase in the money supply, not what the money supply is. 1. If a bank has a required reserve ratio of 25% and you put $500 cash that you have had in the cookie jar into a checking account at the bank, how much of that cash can the bank loan out to a borrower? 2. If the bank does loan out that the cash that you answered in #1, and the borrower takes the loan in cash and walks out the door with it in her pocket, how much has the money supply risen compared to what it was before you put the cash in your checking account. Answer in a dollar amount, not a percent. Note the questions is asking for the increase in the money supply, not what the money supply is. 3. Suppose the borrower puts the borrowed cash back into the bank in the form of a checking account for herself. And suppose the bank always loans out the maximum they can, and that everyone who borrows the money always puts it all back in their own new checking account. What will be the dollar amount of checking accounts that exist at the bank before the bank has to stop re-loaning out any of the money? 4. So what is the increase in the money supply from you depositing $500 cash in your checking account in this situation? Answer in a dollar amount, not a percent. Again note the questions is asking for the increase in the money supply, not what the money supply is.

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