Scenario 16-2
Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%.
-Refer to Scenario 16-2.As a result of Kristy's deposit,checking account deposits in the banking system as a whole (including the original deposit)could eventually increase up to a maximum of

Question

Quizplus · Accepted Answer

The maximum potential increase in checking account deposits is determined by the formula 1/required reserve ratio. In this case, 1/0.2 = 5, meaning that the initial deposit of $10,000 could result in up to $50,000 in new checking account deposits in the banking system as a whole.

Scenario 16-2 Imagine That Kristy Deposits $10,000 of Currency into Her Checking