Assume that the Required Reserve Ratio in Ecoland is 5%.
A $100 deposit will create _______ worth of new money in Ecoland’s economy.
ANSWER: $1900
1/.05=20
100*(1-0.05)=95
95*20=1900
Assume that the Required Reserve Ratio in Ecoland is 5%.
A $100 deposit will create _______ worth of new money in Ecoland’s economy.
ANSWER: $1900
1/.05=20
100*(1-0.05)=95
95*20=1900
