Multiple Choice
Suppose a bank has $50,000 in deposits and $6,000 in reserves. The required reserve ratio is 10%. Which of the following occurs if the required reserve ratio is increased to 12%?
A) The bank's total reserves will fall.
B) The bank will now be fully loaned up.
C) The bank will have insufficient required reserves.
D) The bank's profit will fall.
Correct Answer:
Verified
Correct Answer:
Verified
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