Question

1. A cash reserve of 15% on deposit and customers deposit $150.000 in the bank, show the

bank balance sheet and calculate money creation multiplier​

Answer 1

Please check the attached image for an image of the balance sheet of the bank

money multiplier money creation : $1,000,000

Step-by-step explanation:

Required reserves is the percentage of deposits required of banks to keep as reserves by the central bank

Required reserves = reserve requirement x deposits

$150,000 x 0.15 = $22,500

The amount of loan that the bank can grant = deposits - reserves

$150,000 - $22,500 = $127,500

Money multiplier = amount deposited / reserve requirement

$150,000 / 0.15 = $1,000,000