Suppose the Required Reserve Ratio Is 10 Percent, and Banks

Multiple Choice

Suppose the required reserve ratio is 10 percent, and banks hold no excess reserves. If an individual withdraws $20 million from Bank Zip,

A) the amount of loans or bonds must decrease by $18 million.
B) the amount of loans must increase by $20 million.
C) the amount of loans or bonds must decrease by $20 million.
D) the amount of loans or bonds must increase by $18 million.
E) the amount of loans must decease by $20 million.