Answer:
change in the Money supply = $2000
Explanation:
given data
deposit = $1,000
reserve ratio = 0.50
to find out
how much will checking deposits in the banking system increase as a result
solution
we get here change in the Money supply that is express as
change in the Money supply = Change in the Monetary base × Money multiplier ............................1
here
Money multiplier = [tex]\frac{1}{reserve\ ratio}[/tex] ..................2
Money multiplier = [tex]\frac{1}{0.5}[/tex]
Money multiplier = 2
put value in equation 1
change in the Money supply = 1000 × 2
change in the Money supply = $2000
