Suppose a Bank Has a Desired Reserve Requirement Ratio of 12

question 198

Multiple Choice

Suppose a bank has a desired reserve requirement ratio of 12 percent. If someone deposits $1,000 in the bank,

• A) the bank can make loans of $1,000.
• B) the bankʹs desired reserves rise by $1,000.
• C) immediately after the deposit, excess reserves increase by $880.
• D) Both answers B and C are correct.

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