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assume the fed's reserve requirement is 5 percent and all banks besides the bank of smileville are exactly in compliance with the 5 percent requirement. further assume that people hold only deposits and no currency. starting from the situation as depicted by the t-account, if the bank of smileville decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase?

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Then, at that point, by how much does the cash supply in the end increment 10000

What does "money of supply" imply?

The total amount of money in circulation—cash, coins, and bank account balances—is referred to as the money supply.Most people think that the money supply is a group of safe assets that people and businesses can use to pay bills or invest for the short term.

Which three types of money supply are there?

There are three different kinds of money in the economy, but as people, we will only have ever used cash and your bank account's numbers.

Learn more about cash supply here:

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