Consider the Following Information About a Banking System: New Currency

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 create excess reserves of

A) $20 billion.
B) $32 billion.
C) $40 billion.
D) $0.