Explain how much can first bank lend money supply be expand

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Q1. First bank has total deposits of $2,000,000 legal reserves of $220,000.

a. If the reserve requirement is 10 percent, Illustrate what is the maximum loan that First bank can make and Illustrate what is the maximum increase in the money supply based on First bank's reserve position?

b. If the reserve requirement is changed to 5 percent, Explain how much can First Bank lend and by Explain how much can the money supply be expanded?

Q2. Donald has vast riches and consumes thousands of dollars worth of customer goods each week, yet he is never satisfied. Why not?

Reference no: EM1317861

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