Question

Bank 1 received a deposit of SR1 million. Assuming that the banks retain no excess reserves,...

  1. Bank 1 received a deposit of SR1 million. Assuming that the banks retain no excess reserves, answer the following questions: (2 points)
  1. The reserve requirement is 25 percent.
  1. Fill in the blanks in the table below.
  2. What is the deposit multiplier?

Multiple Deposit Creation

Round

Deposits

Reserves

Loans

Bank 1

Bank2

Bank3

Bank 4

Bank5

All other banks

Totals

SR1, 000,000

SR

SR
  1. Now the reserve requirement is 5 percent.
  1. Fill in the blanks in the similar table.
  2. What is the deposit multiplier?

Multiple Deposit Creation

Round

Deposits

Reserves

Loans

Bank 1

Bank2

Bank3

Bank 4

Bank5

All other banks

Totals

SR1, 000,000

SR

SR
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