Suppose a Bank Has a Desired Reserve Ratio of 12

question 84

Multiple Choice

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

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

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