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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.By how much must the bank's loans decrease as a result of the withdrawal?

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The reserve requirement is 10% so the bank is required to hold 10% of $5000 = $500 in reserve. Therefore, the bank's loans must decrease by the remaining amount, which is $5000-$500 = $4500.

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