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suppose jeff bezos deposits​ $20 million in cash into his checking account at wells fargo bank. if the reserve requirement is​ 10% and no banks hold excess​ reserves, what will be the total change in money​ supply?

Sagot :

Parrain

The total change in money supply, given the amount deposited by Jeff Bezos and the reserve requirement, is + $ 180 million.

How to find the change in money supply ?

The total amount of reserves held by a bank rises with each dollar deposited into an account. The bank will lend out the extra reserves while keeping some of the necessary reserves on hand. The money supply is increased when such loan is made. Banks "generate" money in this way to expand the available supply.

To find the change in money supply, first find the money multiplier by the formula :
= 1 / Reserve requirement

= 1 / 10 %

= 10

The change is therefore :

= Amount left after reserve requirement x Money multiplier

= ( 20 million x ( 1 - 10% )) x 10

= 18 million x 10

= $ 180 million

Find out more on reserve requirements at https://brainly.com/question/25812353

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