Suppose your grandma sends you $100 for your birthday and you deposit it in your checking account. The reserve ratio is 10%. Based upon this deposit, the bank's reserves have increased by _____ and the bank's checkable deposits have increased by _____.

Question

Quizplus · Accepted Answer

When you deposit $100 in your checking account, the bank's reserves increase by the full amount of the deposit, which is $100, because this is the amount they now have on hand. Additionally, the bank's checkable deposits also increase by $100, as this is the amount credited to your account.

Suppose Your Grandma Sends You $100 for Your Birthday and You