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Mr. Jones has decided to deposit $5,000 that he hid in a shoebox into his bank. What is the impact of his deposit to the money supply? (Assume the required reserve ratio is 5% and use simple money multiplier)

From this example, can you elaborate the impact of your deposits into the banks?

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Solution Summary

The impact of your deposits in this case is depicted.

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Answer:
Given that,
Deposit=$5,000
Required reserve ratio=5%

So,

Hence,
...

Solution provided by:
Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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