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If the Federal Reserve decreases the reserve rate from 7% to 5%, how does this affect the amount of money that would result because of fractional-reserve banking from an initial…

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asked Apr 18, 2018 117k views

4 votes

If the Federal Reserve decreases the reserve rate from 7% to 5%, how does this affect the amount of money that would result because of fractional-reserve banking from an initial deposit into a bank of $30,000?

Mathematics
high-school

Selvaram G asked

by Selvaram G

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1 Answer

5 votes

1/0.07=14.29
1/0.05=20
Then
20-14.29=5.71
5.71×30000==171,300 increased

Sdive answered Apr 23, 2018

If the Federal Reserve decreases the reserve rate from 7% to 5%, how does this affect the amount of money that would result because of fractional-reserve banking from an initial…

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