Question

If Jerry deposits $462 of cash in a checking account in the Tenth National Bank, what's the maximum change in the money supply in the economy

Answer 1

Answer:

$4620

Explanation:

It is assumed that the required reserve is 10%

Reserve requirement is the portion of deposit received by banks that the central bank requires to be kept as deposit.  

Increase in the total value of checkable deposit is determined by the money multiplier

Money multiplier = amount deposited / reserve requirement

462 /0,1 = $4620