Please assist with the given problem.
Use a simple Balance Sheet for a typical bank, which has $5,000 of deposits, a required reserve ratio of 10 percent, and excess reserves of $0.
Question 1: What is the value of money multiplier?
Question 2: If the bank lends it's maximum amount of excess reserve, what would be the total amount credit creation in the entire banking system with this initial deposit of $5,000?
Question 3: If Fed raises the required reserve ratio to 20%, how will it change your answers to a & b above?