Suppose You Found a $100 Bill That Was Lost for Many

question 19

Multiple Choice

Suppose you found a $100 bill that was lost for many years under your grandmother's mattress.If the banking system has a cash drain of 5%,its target reserve ratio is 20%,and all excess reserves were lent out,your new deposit of the $100 bill would lead to an eventual expansion of the money supply of

• A)$20.
• B)$25.
• C)$200.
• D)$400.
• E)$500.

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