Suppose that the banking system currently has no excess rese…

Suppose that the banking system currently has no excess reserves and that a bank receives a deposit into a checking account of $50,000 in currency. Using the excess reserve (simple deposit) multiplier, if the required reserve ratio is 0.1, what is the maximum amount that the banking system can lend out?

10-point question Evaluate both of the following statements…

10-point question Evaluate both of the following statements as true or false and explain your reasoning.     a. “If banks increase their excess reserves, the monetary base will increase. If the monetary base increases, the          money supply will increase. Therefore, an increase in excess reserves increases the money supply”.     b. The most important factor accounting for changes in the money supply in the long run is changes in bank         lending policies that affect the money multiplier.