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28 February, 10:19

With a reserve requirement of 5% and required reserves of $10,000, a bank has a total of

a. $475,000 in demand deposits.

b. $50,000 in checkable deposits.

c. $500 in checkable deposits.

d. $10,000 in demand deposits.

e. $200,000 in checkable deposits.

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  1. 28 February, 10:27
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    e. $200,000 in checkable deposits

    Explanation:

    With a reserve requirement of 5% and required reserve of $10,000 a bank has total of:

    Money multiplier = 1/reserve requirement

    Money multiplier = 1/5%

    Money multiplier = 20

    Checkable deposits = money multiplier*required reserve

    Checkable deposits = 200,000
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