If the reserve ratio is 100-percent,then a new deposit of $1000 into a bank account
A)eventually increases the money supply by $1000.
B)leaves the size of the money supply unchanged.
C)eventually decreases the size of the money supply by $1000.
D)eventually increases the money supply by $2000.

Question

Quizplus · Accepted Answer

If the reserve ratio is 100-percent, it means the bank is required to keep 100% of the deposit as reserves and cannot loan out any of the money. Therefore, the size of the money supply remains unchanged.

If the Reserve Ratio Is 100-Percent,then a New Deposit of $1000