Question

Suppose the required reserve ratio is 3 percent, and currency and reserves total $10 million. The maximum money supply that can be supported is:

Answer 1

$333.33 million

Step-by-step explanation:

the required reserve ratio is the ratio of deposits that a bank must keep in its vaults as a required reserve

the maximum amount of deposit = $10 million / 0.03 = $333.33 million