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Economic-Banking system question-thank you?

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The banking system has deposits of $100 billion and no excess reserves. The required reserve ratio is 12.5 percent. A deposit of $10 billion in new money is made in Bank A, and no other bank in the banking system loses reserves. The maximum increase in checkable deposits that can be brought about by the banking system is

$80.0 billion.

$70.0 billion.

$68.0 billion.

$12.5 billion.

$10.0 billion.

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1 ANSWERS


  1. a) $80.0 billion.

    $10/12.5%=10/0.125 = $80

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