Question

With a 10% reserve requirement ratio, a $100 deposit into new bank means that the maximum amount new bank could lend is.

Answer 1

If the reserve requirement is 10%, the deposit multiplier means that banks must keep 10% of all deposits in reserve, but they can create money and stimulate economic activity by lending out the other 90%. So, if someone deposits $100, the bank must keep $10 in reserve but can lend out $90.

Step-by-step explanation:

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