Assume that Jill deposits $20,000 in cash into Welcome National Bank and the central bank has set a required
reserve ratio of 10%.
a. Explain the immediate effect of her deposit on the M1 measure of the money supply.
b. If Welcome National Bank holds an additional 10% of her deposit in reserves, calculate the following:
a.There is no immediate effect of Jill`s deposit on the M1 measure of money supply.This is because the demand... View the full answer