You deposit a $1,000 scholarship check in the bank. If the required reserve ratio is 10 percent, explain how the banking system will create new money and how much money can potentially be created
Once the $1,000 is deposited, the bank is required to hold $100 (10 percent) as required reserves. The remaining $900 represents excess reserves and can be loaned out. The bank may lend the $900 to another customer who may deposit it in another bank, which will then hold 10 percent and lend out the remaining 90 percent again. This process continues until the deposits become too small to lend. In this way, banks can potentially create $10,000 in new deposits from the original $1,000 check.
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Labor market regulations in European Union countries
a. do not contain limitations on plant closing but do have provisions for mandatory severance pay that may discourage firms from expanding employment. b. include limitations on plant closing but have no provisions for mandatory severance pay that may discourage firms from expanding employment. c. neither entail limitations on plant closing nor provisions for mandatory severance pay that may discourage firms from expanding employment. d. include limitations on plant closing and provisions for mandatory severance pay that may discourage firms from expanding employment.