Question

If the federal reserve decreases the reserve rate from 2.5% to 1.25% how does this affect the amount of money that would result because of fractional reserve banking from an initial deposit in a bank of $45,000? A it increases by $3,600,000 B it decreases by $3,600,000 C it decreases by $1,800,000 D it increases by $1,800,000

Answer 1

The correct answer for this question is this one: "D it increases by $1,800,000"
If the federal reserve decreases the reserve rate from 2.5% to 1.25%,  this affect the amount of money that would result because of fractional reserve banking from an initial deposit in a bank of $45,000 is that it increases by $1,800,000Hope this helps answer your question and have a nice day ahead.