Suppose Diego deposits $4,000 in his bank. If the reserve ratio is 10 percent, this will lead to a maximum increase of ________ in checking account balances throughout all banks..
A) $0
B) $4,000
C) $10,000
D) $40,000
Suppose Darrell has $4,000 in currency which he deposits in his bank. If the reserve ratio is 25 percent, this will lead to a maximum increase of ________ in M1 throughout all banks.
A) $0
B) $4,000
C) $6,000
D) $12,000
which formula should I use? a detailed answer would be helpful!
