Suppose Fed's Purchase of Government Bonds Results in a $120

Multiple Choice

Suppose Fed's purchase of government bonds results in a $120, 000 increase in the excess reserves of a particular bank.What would be the applicable reserve requirement for the whole banking system to be able to expand the money supply by $600, 000?

A) 10 percent
B) 12 percent
C) 16 percent
D) 20 percent
E) 25 percent