Suppose that the banking system in Ghana has a required reserve ratio of 10 percent while the banking system in the Ivory Coast has a required reserve ratio of 20 percent.In which country would $100 of initial excess reserves be able to cause a larger total amount of money creation? For the two countries, if an amount of $2000 each are deposited at two separate banks in both countries and decides to give $600 as loans, what is the maximum amount of money that can be created in both countries with that deposit .

Required reserve ratio of Ghana = 10% Required reserve ratio of Ivory Coast = 20% Excess reserve =…

Answered: Suppose that the banking system in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that the banking system in Ghana has a required reserve ratio of 10 percent while the banking system in the Ivory Coast has a required reserve ratio of 20 percent.

In which country would $100 of initial excess reserves be able to cause a larger total amount of money creation?
For the two countries, if an amount of $2000 each are deposited at two separate banks in both countries and decides to give $600 as loans, what is the maximum amount of money that can be created in both countries with that deposit .

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