consider a country where all money is currently held as cash and the money supply has a value of $6,000. a banking system is developed, and the residents of the country deposit the $6,000 of cash into the banking system and decide they no longer want to hold any cash. if the reserve ratio is equal to 5%, how much can the $6,000 increase the amount of money in the economy? the money supply in the economy will be equal to $ 120000 . the banking system has the ability to create $ of new money.
