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 the Fed purchases $10 million worth of government bonds from Bank INF, the amount of reserves held by Bank INF will

A) not change.
B) increase by $1 million.
C) decrease by $10 million.
D) decrease by $1 million.
E) increase by $10 million.