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(Scenario: Money Supply Changes II)
Lucia withdraws $6,000 from her checking account to pay tuition this semester. Assume that the reserve requirement is 20% and that banks do not hold excess reserves. As a result of the withdrawal, required reserves:
decrease by $6,000.
decrease by $1,200.
decrease by $4,800.
don't change.

Respuesta :

As a result of the withdrawal of $6,000, the required reserves decrease by $1,200. The correct option is B.

What causes bank reserves to decrease?

Bank reserves fluctuate between increases and decreases depending on the state of the economy. Businesses and consumers borrow more money and spend more during prosperous times. They are unable or unwilling to take on additional debt during recessions. Banks may also increase their lending standards during hard times to prevent defaults.

Your bank's reserves are decreased when you withdraw money. The money supply is decreased by a multiple of the amount you withdraw, just as it is increased by a multiple of the initial deposit made at Acme Bank.

Thus, the ideal selection is option B.

Learn more about Bank Reserve here:

https://brainly.com/question/16196841

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