Answer:
$3,325
Explanation:
Reserves are maintained to fulfil the customers withdrawal requirement. It is imposed by the State bank over the Banks to hold a specific percent of cash as reserves. Bank hold the reserves and invest or utilize the residual in the market.
In this question 5% of $3,500 will be reserved and the remaining $3,325 will be available for the money supply in the market in different forms.
the maximum possible increase in the money supply as a result of your bank deposit is $3,325.
