MedSminonem
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I'm reading my management textbook and came across a section called "Banks as Creators of Money"
Here's the example, FROM THE BOOK:
Suppose a bank is required to have a reserve of 10% of all deposits.
You deposit $100, Money that is held in reserve by the bank is $10, Money that the bank has to lend is $90.
Total supply is $190.
HOW? is the total supply $190 when you only deposited $100 initially?
Then the question keeps going .....
Suppose the bank lends that $90 to your friend. Your friend writes a cheque to McDonalds (or whatever) McDonalds' bank now ends up with a $90 deposit. Therefore:
the Deposit is $90, Money held in reserve is $9 (10%). And money to lend is now $81.
The total reserve for both situations above is $271... again i dont understand how..
can someone please explain
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Here's the example, FROM THE BOOK:
Suppose a bank is required to have a reserve of 10% of all deposits.
You deposit $100, Money that is held in reserve by the bank is $10, Money that the bank has to lend is $90.
Total supply is $190.
HOW? is the total supply $190 when you only deposited $100 initially?
Then the question keeps going .....
Suppose the bank lends that $90 to your friend. Your friend writes a cheque to McDonalds (or whatever) McDonalds' bank now ends up with a $90 deposit. Therefore:
the Deposit is $90, Money held in reserve is $9 (10%). And money to lend is now $81.
The total reserve for both situations above is $271... again i dont understand how..
can someone please explain
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http://oxygenworks.net/srforum/profile.php?mode=viewprofile&u=26166
http://danreed.com/forum/profile.php?mode=viewprofile&u=931
http://forum.vinbazar.com/profile.php?mode=viewprofile&u=54715
http://fws.cc/sudtreen/index.php?action=profile;u=42
http://truckers4jesus.com/SMF/index.php?action=profile;u=9791
http://michaeltoney.com/smf/index.php?action=profile;u=73395
http://wap.badun.ru/forum/profile.php?id=37610
http://sexeggheads.com/forum/index.php?action=profile;u=9598
http://www.rccscontrols.com/phpbb/Files/phpBB2/profile.php?mode=viewprofile&u=29884
http://warsyndicate.net/smf/index.php?action=profile;u=10099
http://www.vgac.net/forum/member.php?u=12244
http://www.mikegibbins.com/message/profile.php?mode=viewprofile&u=15263
http://www.ganedineroenlainternet.com/foro/index.php?action=profile;u=13777
http://apancas.com/intranet/profile.php?mode=viewprofile&u=29124
http://kanopiinsansejahtera.com/forum/profile.php?mode=viewprofile&u=19339
http://www.asiasonic.com.tw/phpBB2/profile.php?mode=viewprofile&u=22000
http://www.mycomhadyai.com/forum/index.php?action=profile;u=6799
http://itascaradio.com/forum/index.php?action=profile;u=7749
http://www.ochoplacas.com/phpBB2/profile.php?mode=viewprofile&u=75813
http://www.rolloveraid.com/phpBB2/profile.php?mode=viewprofile&u=6007
http://wahjackpot.com/phpBB2/profile.php?mode=viewprofile&u=17377
http://www.dramabiz.com/classified_ads/profile.php?mode=viewprofile&u=503
http://www.saechsische-schweiz-ring.de/phpBB2/profile.php?mode=viewprofile&u=27
http://mosbaza.ru/phpBB2/profile.php?mode=viewprofile&u=72811
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