With a desired reserve ratio of 20 percent, an increase in reserves of $10,000 could lead to a maximum increase in chequing account deposits in the entire banking system of

Question

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The money multiplier is 1 divided by the reserve ratio, which is 1/0.20 = 5. Therefore, an increase in reserves of $10,000 could lead to a maximum increase in deposits of $10,000 * 5 = $50,000.

With a Desired Reserve Ratio of 20 Percent, an Increase