Assume that the reserve ratio is 20% and banks in the system are loaning out all their excess reserve. if people collectively cash out $10 billion from their checking accounts, then the lending ability of the banking system will . increased by $10 billion. b. decreased by $10 billion. c. decreased by $40 billion. d. decreased by $50 billion.

C. decreased by $40 billion

Explanation:

For computing the lending ability, first we have to determine the money multiplier which is shown below:

We know that

Money multiplier = 1 ÷ reserve ratio

                            = 1 ÷ 20%

                            = 5

So, the total cash would be

= $10 billion × $5

= $50 million

Now the lending ability would be

=$50 billion × (1 - 20%)

= $50 billion × 0.80

= $40 billion

you have to put the parentheses like this:

in fact, you have to perform the operation inside parentheses first, and then proceed in order:

answer; coefficient of correlation;