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Suppose that the required reserve ratio is 10 percent and you withdraw $25,000 from Comerical Bank.
What is the total decrease in deposits in the banking system?

Answer :

The total decrease in deposits in the banking system is $250,000.

What is total decrease in deposits?

Reserve ratio is the percentage of deposits that is required of commercial banks to keep as reserves.

Decrease in deposits = amount withdrawn / required reserve ratio

$25,000 / 0.1 = $250,000

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