10SQ8(review) - John deposits $100 in his bank Calculate a The bank’s excess reserves as soon as John makes the deposit b The maximum amount of

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Econ. 1A. Review questions for Quiz 8 1. A change in money supply (M 2 ) will affect CPI, RGDP and unemployment rate in an economy. What is the official measure of money in an economy? 2. How do banks create new deposits by making loans, and what factors limit the amount of deposits and loan they can create? 3. The required ration (rrr) is 0.1, and banks have no excess reserves (ER).
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Unformatted text preview: John deposits $100 in his bank. Calculate a. The bank’s excess reserves as soon as John makes the deposit. b. The maximum amount of loans that the banking system can make. c. The maximum amount of new money that the banking system can create. [ Show the creation of loans and deposits by using T account ]...
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This note was uploaded on 09/08/2010 for the course ECON 1A at San Jose State University .

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