The Following Is Information About a Banking System: New Currency

question 154

Multiple Choice

The following is information about a banking system: New currency deposited in the system = $40 billion; desired reserve ratio = 20%;
Excess reserves prior to the currency deposit = $0.Refer to the above information.The $40 billion deposit of currency into chequing accounts will create excess reserves of:

• A)$20 billion.
• B)$32 billion.
• C)$40 billion.
• D)$0.

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