Question

Assume that $4.4 million is deposited into a bank with a reserve requirement of 16 percent. Instructions: Round your answer to two decimal places. a. What is the money supply as a result

Answer 1

$3696000

Step-by-step explanation:

Given:

Amount deposited into a bank is $4.4 million with a reserve requirement of 16 percent.

To find: money supply

Solution:

Amount deposited into a bank = $4.4 million = $4400000

Amount of reserve =
`(16)/(100)` × 4400000 = $704000

Money supply = Amount deposited into a bank - Amount of reserve

= $4400000 - $704000

=$3696000