A Bank Has Excess Reserves of $1,000,000 and Makes a New

question 66

Multiple Choice

A bank has excess reserves of $1,000,000 and makes a new loan for $500,000.If the bank faces a 10 percent required reserve ratio,by how much will the money supply increase when the loan is made?

• A) $0
• B) $50,000
• C) $5,000,000
• D) $1,500,000
• E) $2,000,000

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