Suppose a Banking System Has a Required Reserve Ratio of 10

question 109

Multiple Choice

Suppose a banking system has a required reserve ratio of 10 percent.What is the maximum possible increase in the money supply in response to a $2 billion increase in excess reserves for the whole banking system?

• A)$20 billion.
• B)$2 billion.
• C)$200 million.
• D)$210 billion.

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Definitions:

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