Question

Suppose you deposit ?$900900 cash into your checking account. by how much will checking deposits in the banking system increase as a result when the required reserve ratio is 0.11?0?

Answer 1

Your deposit of $900,900 will increase by $99,099 given the require reserve ratio of 0.11. Remember that the reserve ratio is a part of a bank depositor’s total account that banking institutions must keep as available cash. This is as regulated and determined by the Federal Reserve.