Suppose that a bank in the banking system of Northland receives $10,000 in high powered money previously held as cash and issues a new deposit of $10,000. Calculate the total change in deposits in the banking system can create under each of the following scenarios:
a) The desired reserve ratio (rr) is 10% and people hold no cash (cr = 0).
b) The desired reserve ratio (rr) is 20% and people hold no cash (cr = 0)
c) The desired reserve ratio (rr) is 10% and the cash ratio (cr) is 10%.
d) The desired reserve ratio (rr) is 10% and the cash ratio (cr) is 20%.
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