The question asked that suppose that the legally required ratio of reserves to deposits is 1/10. If $100 million in excess reserves aremade available to the banking system, by how much can the banking system increase the money supply? What is the answer if the legally required ratio of reserves to deposits is 1/6 rather than 1/10?© BrainMass Inc. brainmass.com October 9, 2019, 5:35 pm ad1c9bdddf
This is a question of monetary multiplier:
multiplier = 1/required reserve ratio = ...
A question of monetary multiplier is assessed in the solution.