You Deposit $4,000 in Currency in Your Checking Account

Multiple Choice

You deposit $4,000 in currency in your checking account. The bank holds 20 percent of all deposits as desired reserves. As a direct result of your deposit, your bank will make loans and by so doing will create

A) $1,600 of new money.
B) $200 of new money.
C) $3,200 of new money.
D) $800 of new money.