Question

Suppose the reserve requirement (R) is 15%. What is the effect on total checkable deposits in the economy if bank reserves increase by $60 billion. Assume E=0

Answer 1

$400 billion

Step-by-step explanation:

The computation on the impact on total checkable deposits is shown below

= Increased in the bank reservce ÷ reserve requirement

= $60,000,000,000 ÷ 15%

= $400 billion

Therefore the impact on the total checkable deposits in the case when the bank reserves rises is $400 billion

We simply applied the above formula so that the correct value could come

And, the same is to be considered