At One Time, the Country of Sylvania Had No Banks

Multiple Choice

At one time, the country of Sylvania had no banks, but had currency of $10 million. Then a banking system was established with a reserve requirement of 20 percent. The people of Sylvania now keep half their money in the form of currency and half in the form of bank deposits. If banks do not hold excess reserves, how much currency do the people of Sylvania now hold?

A) $2 million
B) $5 million
C) $8.33 million
D) $9.09 million