Assuming individuals hold no cash (all cash is in bank vaults as reserves),calculate the simple money multiplier and the money supply from the following reserve requirements and deposits in the system.
(a)reserve ratio = 5%; deposits = $10,000
(b)reserve ratio = 10%; deposits = $10,000
(c)reserve ratio = 10%; deposits = $20,000
Now assume individuals hold 25% of their money in the form of cash.Calculate the simple money multiplier and the money supply for situations a-c above.

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The Answer of Assuming individuals hold no cash (all cash is in bank vaults as reserves),calculate the simple money multiplier and the money supply from the following reserve requirements and deposits in the system.
(a)reserve ratio = 5%; deposits = $10,000
(b)reserve ratio = 10%; deposits = $10,000
(c)reserve ratio = 10%; deposits = $20,000
Now assume individuals hold 25% of their money in the form of cash.Calculate the simple money multiplier and the money supply for situations a-c above.

Assuming Individuals Hold No Cash (All Cash Is in Bank