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If reserves increase by $8 billion, what is the difference in the resulting change in checkable deposits when the required reserve ratio is 12.5 percent compared to when it is 10 percent

Answer :

abiolataiwo2015

The difference in the resulting change in checkable deposits when the required reserve ratio is 12.5 percent is $16 billion.

                                                     

Difference in the resulting change

Using this formula

Difference in the resulting change=(Increase in reserve/required reserved ratio of 10%)-(Increase in reserve/required reserved ratio of 12.5%)

Let plug in the formula

Difference in the resulting change=($8 billion/0.10)-($8 billion/0.125)

Difference in the resulting change =$80 billion-$64 billion

Difference in the resulting change=$16 billion

Therefore the difference in the resulting change in checkable deposits when the required reserve ratio is 12.5 percent is $16 billion.

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