The Following Is Information About a Banking System: New Currency

question 25

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 new currency deposit = $0.Refer to the above information.The banking system will be able to expand the money supply through loans by:

• A)$160 billion.
• B)$200 billion.
• C)$40 billion.
• D)$128 billion.

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