The Reserve Ratio Is 10 Percent,banks Do Not Hold Excess

Multiple Choice

The reserve ratio is 10 percent,banks do not hold excess reserves,and people hold only deposits and no currency.When the Fed sells $20 million worth of bonds to the public,bank reserves

A) increase by $20 million and the money supply eventually increases by $20 million.
B) increase by $20 million and the money supply eventually increases by $200 million.
C) decrease by $2 million and the money supply eventually increases by $20 million.
D) decrease by $20 million and the money supply eventually decreases by $200 million.