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Assuming a required reserve ratio of​ 10% and the Fed purchased​ $1 million worth of​ mortgage-backed securities, make use of the simple deposit multiplier to determine by how much checking deposits would
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Assuming a required reserve ratio of​ 10% and the Fed purchased​ $1 million worth of​ mortgage-backed securities, make use of the simple deposit multiplier to determine by how much checking deposits would change.

A. decrease by​ $1 million
B. increase by​ $10 million
C. decrease by​ $10 million
D. increase by​ $1 million

User Dominique Fortin
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Answer:

B. Increase by $10 million.

User JorenHeit
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