Assuming a simple money multiplier, if the Fed increases bank reserves by $100 and the required reserve ratio is 10 percent, then the maximum increase in deposits within the banking system as a whole is

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Quizplus · Accepted Answer

The money multiplier is calculated as 1 divided by the required reserve ratio (0.10), which equals 10. Therefore, the maximum increase in deposits is $100 multiplied by 10, resulting in $1,000.

Assuming a Simple Money Multiplier, If the Fed Increases Bank