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The reserve requirement is 10% and Jack withdraws $5000 travel money from his chequable deposit.Assume that banks do not hold any excess reserves and that the public holds no currency,only chequable bank deposits.
-(Scenario: Money Supply Changes)Refer to Scenario: Money Supply Changes.After the withdrawal reserves _____,and chequable deposits _____ by $5000.

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When Jack withdraws $5000 from his chequable deposit, reserves decrease by $5000 because banks must keep 10% of deposits as reserves. Chequable deposits also decrease by $5000 because the money has been taken out of the bank's balance sheet.

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