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Assuming All Excess Reserves Are Loaned Out, Currency Holdings by the Public

Question 89

Multiple Choice

Assuming all excess reserves are loaned out, currency holdings by the public are zero, and a reserve ratio of 2 percent, an initial deposit of $500 will lead to a total increase in deposits of


A) $250.
B) $5,000.
C) $25,000.
D) $50,000.

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