Suppose that Goldstar Bank is completely loaned up Now supp

Suppose that Goldstar Bank is completely \"loaned up \" Now suppose that a customer deposits an additional Se60 Assume the reserve requirement is 10 percent. Instructions: Enter your answers as whole numbers a. As a consequence of the $60,000 deposit, Goldstar Bank will now have excess reserves in the amount of $ b. As a result of the $60,000 intal deposit into Goldstar Bank, the banking system can generate a maximum of sin nevw deposits and loans.

Solution

A.Required reserve is 10%

10% of 60,000 is 6,000

Excess reserve=Total deposits-required reserves

Excess reserves=60,000-6,000=54,000

B.Credit created=money multiplier(k)*excess reserve

K=1/reserve ratio=1/10%=10

Credit created=54,000*10=540,000