If the Federal Reserve decreases the reserve rate from 6% to 4%, how does this affect the amount of money that would result because of fractional-reserve banking from an initial deposit into a bank of $15,000?

A. It increases the amount by $125,000.
B. It decreases the amount by $125,000.
C. It decreases the amount by $250,000.
D. It increases the amount by $250,000.

Question

If the Federal Reserve decreases the reserve rate from 6% to 4%, how does this affect the amount of money that would result because of fractional-reserve banking from an initial deposit into a bank of $15,000?

 		A.	It increases the amount by $125,000.
 		B.	It decreases the amount by $125,000.
 		C.	It decreases the amount by $250,000.
 		D.	It increases the amount by $250,000.

perl · Answer

whats the multiplier effect?

perl · Answer

what book is this? i might need to read up a bit

anonymous · Answer

10 x 15,000 = what ..?

perl · Answer

so if there was a 6% reserve rate  that means the bank needs to keep on reserve
.06 * 15,000 
if there was a 4% reserve rate that means he needs to keep on reserve
.04 * 15,000
find the difference

perl · Answer

i would have to check your book, i think i did it wrong