If the target reserve ratio in the banking system is 10%,there is no cash drain,and there are no excess reserves,a new deposit of $1 will lead to an eventual expansion of the money supply of

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The correct answer is D) $10.00. This is because with a target reserve ratio of 10%, banks are required to hold 10% of deposits as reserves and can lend out the other 90%. This process of lending and redepositing can theoretically continue until the initial deposit of $1 has created additional bank deposits totaling $10. This is calculated using the money multiplier formula, which is 1/reserve ratio = 1/0.10 = 10.

If the Target Reserve Ratio in the Banking System Is