Answer :
Answer:
Note: The complete question is attached below
When reserve ratio is 0.20, Deposits at Bank A would decrease by $20,000.00 and total ultimate impact on money supply would be a change of $-100,000.00 (= -$20,000 / 0.2), reflecting a money multiplier of 5.00 (= -$100,000 / -$20,000).
A bonds are defined as the securities under which the lender lend some money in order to earn regular interest amount. Therefore, Deposits at Bank A would be decreased.
What is the term Central Bank about?
Central banks are those banks that serve the country's banking system. They provide money transfers back and forth between banks and governmental institutions.
Solution:
When reserve ratio is 0.20, Deposits at Bank A would decrease by $20,000.00 and total ultimate impact on money supply would be a change of $-100,000.00 (= -$20,000 / 0.2), reflecting a money multiplier of 5.00 (= -$100,000 / -$20,000).
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