Multiple Choice
Suppose that the required reserve ratio is 0.2,and the Fed buys $5,000 of U.S.government securities from Bank A,which lends $4,000 and keeps $1,000 in its vault in cash.In this round of the money-creation process,the money supply,as measured by M1,has increased by
A) $1,000
B) $4,000
C) $5,000
D) $10,000
E) $3,000
Correct Answer:
Verified
Correct Answer:
Verified
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