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2 https//elearn tnstafe edu/d2/le/content/7236068/viewContent/49745410/Vie Harcus Abdul Economics Principles Marcus Abdul&1 41n8 5:18PM Homework: Homework Chapter 14 Save Score: 0 of 1 pt HW Score: 69.17%, 13830f 20 pts 11 of 20 3 Concept: Change in Money Supply Question Hep$ Supoose you depost $2,300 cash into your checking account By how much will the al money sapplyincroase as a esut when the sespured reserve is s 0 202 The change is the money supoly is (oner your rost roundled to the aro o Entet your answer im the answer box and then chck Check Asaer All parts showing Clear Au Send to Bnder Reflect in

Explanation / Answer

The change in the money supply is $11,500

This is a money multiplier question which is 1/(reserve ratio).

So, the money multiplier is equal to 1/0.20= 5. Which says each new dollar creates five dollars into the money supply. So, if you deposit $2,300 in new cash, the money supply increases by $11,500

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