Suppose that you take $350 in currency out of your pocket and deposit it in your checking account. If the required reserve ratio is 12%, what is the largest amount (in dollars) by which the money supply can increase as a result of your action?

Include the $350 as part of the new money supply and assume the bank does not hold excess reserves.

Answer rating: 100% (QA)

The required reserve ratio is the percentage of deposits that b... View the full answer