If banks hold a 30 percent reserve ratio, an initial increase in bank reserves of $30 will lead to an eventual:
A) increase in the money supply of $180.
B) increase in the money supply of $90.
C) increase in the money supply of $100.
D) increase in loans of $100.
E) increase in loans of $90.
This is a deposit multiplier question:
Deposit multiplier = 1 / Reserve ...
A deposit multiplier question is solved.