Answer to Question #145743 in Accounting for Rupali Pawar

Question #145743
Suppose we deposit $565 worth of currency into the bank. Banks make as many loans as possible, people hold no additional currency, and the reserve ratio is 15%. As a result of the loan process, what is the value of total deposits in the banking system? Enter a whole number with no dollar sign. Round to the nearest whole number.
1
Expert's answer
2020-11-24T06:23:06-0500

total deposit = initial deposit ×\times money multiplier

=565×1/reserve=565 \times 1/ reserve requirementrequirement

=565×10.15=3766.67=565 \times\frac{1}{0.15} = 3766.67

=3767=3767


Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be the first!

Leave a comment