2016, Question 2 · 6 points
Bank balance sheet and money creation
Use a bank's balance sheet and a 10 percent reserve requirement to find how much it can lend before and after a $100 cash deposit, then work out the most that loans, deposits and the money supply can grow across the banking system and say why the real change could fall short.
This exam had three free-response questions in 60 minutes (a 10 minute reading period and 50 minutes of writing), with a suggestion to spend about half the time on Question 1 and split the rest evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.
Lessons this question draws on
1 Read the question
The question is College Board's, from the 2016 exam. It starts on page 3 of the PDF. College Board no longer posts this exam, so it opens from the copy of College Board's PDF that the Internet Archive saved on August 5, 2022.
2 Write your answer
Answer each part the way you would on the exam, in full sentences, with your work shown. Your writing saves as you type.
3 Score it
Score your answer against College Board's scoring guidelines, one point at a time. Give yourself a point only when your answer says what the guideline asks for.
Scoring guidelines (PDF, page 4) What the exam readers saw (Student Performance Q&A)
Question, scoring guidelines and Chief Reader report: College Board, from the Internet Archive. The title, summary are ours.