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Assume that the required reserve ratio is10 percent, banks keep no excess reserves,and borrowers deposit all loans made by banks.Suppose you have saved $100 in cash at home and decide to deposit it in your checking account.As a result of your deposit, the money supply can increase by a maximum of

Sagot :

Cricetus

Answer:

The right answer is "10".

Explanation:

The given values are:

Deposit amount,

= $100

Required reserve ration,

= 10%

or,

= 0.1

Now,

The formula to calculate the multiplier will be:

⇒  [tex]Multiplier=\frac{1}{Required \ reserve \ ratio}[/tex]

On putting the values in the above formula, we get

⇒                    [tex]=\frac{1}{0.1}[/tex]

⇒                    [tex]=10[/tex]

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