Final answer:
With a 100 percent reserve ratio, the bank cannot loan out any part of a deposit, hence the money supply does not increase; it remains unchanged by the amount of the initial deposit only. option c.
Step-by-step explanation:
If the reserve ratio is 100 percent, the banking system does not have the ability to increase the money supply through the process of fractional-reserve banking. For every deposit made, the bank must keep an equivalent amount in reserves, meaning no new money can be created. For example, if a bank receives a deposit of $1,000 and the reserve ratio is 100 percent, the bank must keep the full $1,000 as reserves. Consequently, there is no excess reserve that can be loaned out, and the money supply will not increase. The answer is that the money supply will eventually increase by $0 beyond the initial deposit.