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question

In the extreme case, 1,000ofnewreservesputintoabankwillultimatelyresultinanincreaseof 1,000 of new reserves put into a bank will ultimately result in an increase of 5,000 of bank de-posits, assuming that the reserve ratio is 20%. But in reality this is rarely the case. What stops the extreme case from being realized?
Plain-text mathematical notation (without MathML)
In the extreme case, 1,000ofnewreservesputintoabankwillultimatelyresultinanincreaseof 5,000 of bank de-posits, assuming that the reserve ratio is 20%. But in reality this is rarely the case. What stops the extreme case from being realized?
Original LaTeX notation
In the extreme case, $ 1,000 of new reserves put into a bank will ultimately result in an increase of $ 5,000 of bank de-posits, assuming that the reserve ratio is 20%. But in reality this is rarely the case. What stops the extreme case from being realized?

category

economics

options

  1. A decrease in the money supply by the central bank
  2. Withdrawals of reserves from the banking system and not adhering to the reserve ratio
  3. Low bank deposits
  4. Excessive regulation of the banking industry
  5. Increase in government borrowing crowding out private lending

src

stemez-Economics

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