People in saudi arabia hold a larger part

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T or F

1- In the months of June and July, people in Saudi Arabia hold a larger part of their money in the form of currency (cash) rather than depositing their money in the banks, because they intend to shop and travel for the summer vacation. As a result, other things the same, the money supply increases.

2-Assume that when $80,000 cash enter the banking system, the money supply ultimately increases by $320,000. Assume also that all banks do not hold excess reserves and that the entire money supply consists of demand deposits. Then the total legal reserves for all banks will amount to $40,000, and total loans and investments for all banks will be equal to $ 280,000.

Reference no: EM131016703

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People in saudi arabia hold a larger part : 1- In the months of June and July, people in Saudi Arabia hold a larger part of their money in the form of currency (cash) rather than depositing their money in the banks, because they intend to shop and travel for the summer vacation. As a result, o..

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