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If $500 of New Reserves Generates $1000 of New Money

Question 6

Multiple Choice

If $500 of new reserves generates $1000 of new money in the economy,then the money multiplier is


A) 2 and the reserve ratio is 50 percent.
B) ​2 and the reserve ratio is 2 percent.
C) ​0.5 and the reserve ratio is 50 percent.
D) ​0.5 and the reserve ratio is 2 percent.

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