Multiple Choice
Assume that banks do not hold excess reserves, all deposits remain in the banking system and that the required reserve ratio is 20%. If one bank obtains excess reserves of $10,000, then the maximum increase in money supply is
A) $10,000.
B) $20,000.
C) $40,000.
D) $50,000.
Correct Answer:
Verified
Correct Answer:
Verified
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