On a Certain Date, the Banking System Had $40 Billion

Multiple Choice

On a certain date, the banking system had $40 billion in excess reserves. The legally required reserve ratio was 20 percent. Potentially, if these funds were loaned and eventually the entire amount re-deposited with a bank, the banking system as a whole could increase the money supply by

A) a maximum of $40 billion.
B) a maximum of $160 billion.
C) a maximum of $200 billion.
D) more than $200 billion.