Multiple Choice
Assume that the banking system has $200 billion in reserves.There are no excess reserves in the system.If the reserve requirement is decreased from 10 percent to 8 percent, what will happen to the level of excess reserves in the system?
A) There will be a deficiency of $40 billion in reserves.
B) There will be a deficiency of $20 billion in reserves.
C) There will be $20 billion in excess reserves.
D) There will be $40 billion in excess reserves.
Correct Answer:
Verified
Correct Answer:
Verified
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