Multiple Choice
Consider the following information about a banking system: new currency deposited in the system = $40 billion, legal reserve ratio = 0.20, excess reserves prior to the currency deposit = $0. The $40 billion deposit of currency
Into checking accounts will initially create
A) $8 billion of new checkable deposits.
B) $10 billion of new checkable deposits.
C) $40 billion of new checkable deposits.
D) $200 billion of new checkable deposits.
Correct Answer:
Verified
Correct Answer:
Verified
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