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Suppose That There Is a $2 Million Increase in Excess

Question 117

Multiple Choice

Suppose that there is a $2 million increase in excess reserves, and the reserve requirement is 5%. What happens to the money supply?


A) The money supply increases by $100,000.
B) The money supply increases by $40 million.
C) The money supply increases by $10 million.
D) The money supply increases by $1 million.

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