Answer the question on the basis of the following information about a banking system: new currency deposited in the system = $40 billion; legal reserve ratio = 0.20; excess reserves prior to the currency deposit = $0. refer to the information. with the $40 billion deposit, the banking system will be able to expand the money supply through loans by:

money supply through loans is $200 billion

Explanation:

given data

currency deposited = $40 billion

reserve ratio = 0.20

to find out

money supply through loans

solution

first we find here money multiplier that is

money multiplier = 1 / reserve ration    1

put here value in equation 1

money multiplier = 1 / 0.20

money multiplier = 5

so here

money supply through loans = 5 × currency deposited   2

put here value

money supply through loans = 5 × 40 = 200

so money supply through loans is $200 billion

answer; correct answer is investing activity;

answer; /// i believe the correct answer is first in, first out(fifo); //