Exhibit 19-5 Balance sheet of Tucker National Bank $$\begin{array} { | l r | l l | }
\hline { \text { Assets } } &&{ \text { Liabilities } } \
\hline \text { Required reserves } & \$\_& \text { Checkable deposits } & \$ 100,000 \
\text { Excess reserves } &5,000 & & \
\text { Loans } &70,000 & \
\text { Total } & \$ 100,000 & \text { Total } & \$100,000 \
\hline
\end{array}$$ If all banks in the system shown in Exhibit 19-5 were identical to Tucker National Bank, the money multiplier for the system would be:

Question

Exhibit 19-5 Balance sheet of Tucker National Bank $$\begin{array} { | l r | l l | } 
\hline  { \text { Assets } } &&{ \text { Liabilities } } \
\hline \text { Required reserves } & \$\_& \text { Checkable deposits } & \$ 100,000 \
\text { Excess reserves } &5,000 & & \
 \text { Loans } &70,000 & \
\text { Total } & \$ 100,000 & \text { Total } & \$100,000 \
\hline
\end{array}$$ If all banks in the system shown in Exhibit 19-5 were identical to Tucker National Bank, the money multiplier for the system would be:

Quizplus · Accepted Answer

The money multiplier is calculated as 1/(required reserve ratio). In this case, the required reserve ratio is 5,000/100,000 = 0.05. Therefore, the money multiplier is 1/0.05 = 20.

Exhibit 19-5 Balance Sheet of Tucker National Bank If All Banks in the System Shown in Exhibit 19-5