Question

Suppose your grandma sends you $100 for your birthday and you deposit that $100 in your checking account. the reserve ratio is 10%. based upon this deposit, the bank's excess reserves have increased by _____, and if the bank lends these new excess reserves, the money supply could eventually grow by as much as an additional _____

Answer 1

Based upon this deposit, the bank's excess reserves have increased by 90, and if the bank lends these excess reserves, the money supply could eventually grow by as much as an additional 900.