If the required reserve ratio is 10 percent,an increase in bank reserves of $1,000 can support an increase in checking account deposits (including the original deposit)in the banking system as a whole of up to

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Quizplus · Accepted Answer

The required reserve ratio is the portion of deposits that banks must hold in reserve and cannot lend out. If the required reserve ratio is 10 percent, then a $1,000 increase in bank reserves can support an increase in checking account deposits of up to $10,000 ($1,000 divided by 10 percent). This is because banks are able to lend out the remaining 90 percent of the deposited funds. Therefore, the best choice is C.

If the Required Reserve Ratio Is 10 Percent,an Increase in Bank