Scenario 14-2
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 14-2.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

Based on the required reserve ratio of 20%, the maximum potential increase in checking account deposits in the banking system as a whole is calculated as follows:
$10,000 / 0.20 = $50,000. This means that every time a deposit is made into the banking system, the money supply can increase up to a maximum of 5 times the original deposit. Therefore, the correct answer is choice C, $50,000.

Scenario 14-2 Imagine That Kristy Deposits $10,000 of Currency into Her Checking