Multiple Choice
If a bank uses $500 of excess reserves to make a new loan when the reserve ratio is 8 percent,this action by itself initially makes the money supply
A) and wealth increase by $500.
B) and wealth decrease by $500.
C) increase by $500 while wealth does not change.
D) decrease by $500 while wealth decreases by $500.
Correct Answer:
Verified
Correct Answer:
Verified
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