5 good questions on "Reserves, Bank deposits, and the money multiplier"
IT IS STILL IN CURRENCY
- the bank keeps the reserve ratio
- the bank lends out all the excess reserves
- this money that is loaned will end up in another bank account
- this starts the money multiplier
1000+(1000*(1-rr)) +(1000*(1-rr)^2)+(1000*(1-rr)^3)+(1000*(1-rr)^n)
- This will increase the total value of chequable deposits
- the total value of the chequable deposits will be equal to the value of bank reserves divided by the reserve ratio
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