Level of total deposits the banking system can create

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If the reserve ratio set by the Federal Reserve is 20% then what is the deposit multiplier? Your answer is-----. If the initial total reserves were 200 what level of total deposits the banking system can create? (Assume it is the simple banking system where deposits are the only form of money.)

a. 10 , and 4000

b. 3, and 3000

c. 5, and1000

d. 2, and 2,000

Reference no: EM13832673

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