Chiwazii4678 Chiwazii4678

28-12-2019
Business

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If reserves in the banking system increase by $100, then checkable deposits will increase by $500 in the model of multiple deposit creation when the required reserve ratio is a _________.a. 0.01b. 0.1c. 0.06d. 0.2

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Karabo99 Karabo99

28-12-2019

Answer:

d. 0.2

Explanation:

D = 500

R = 100

D*rr = R

500*rr = 100

rr = 100/500

= 0.2

Therefore, The required reserve ratio is a 0.2

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