Question: T or F why 1- Assume that when $80,000 cash enter the banking system, the money supply ultimately increases by $320,000. Assume also that all banks do not hold excess reserves and that the entire money supply consists of demand deposits. Then t

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Question:

T or F why

1- Assume that when $80,000 cash enter the banking system, the money supply ultimately increases by $320,000. Assume also that all banks do not hold excess reserves and that the entire money supply consists of demand deposits. Then the total legal reserves for all banks will amount to $40,000, and total loans and investments for all banks will be equal to $ 280,000.

2- Banks cannot affect or contribute to changes in the money supply if they were required to hold all deposits in reserve.

3-Nowadays, a credit card is similar to a check, in money definition, according to macroeconomics.


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