If a Bank Uses $100 of Excess Reserves to Make

Multiple Choice

If a bank uses $100 of excess reserves to make a new loan when the reserve ratio is 20 percent, this action by itself initially makes the money supply

A) and wealth increase by $100.
B) and wealth decrease by $100.
C) increase by $100 while wealth does not change.
D) decrease by $100 while wealth decreases by $100.