Suppose Checking Deposits Increase by $6,000 After All Rounds of the Money-Creation

question 118

Multiple Choice

Suppose checking deposits increase by $6,000 after all rounds of the money-creation process when the Fed buys $1,200 worth of U.S.government securities.This implies that the maximum value of the required reserve ratio is:

• A)5.
• B)0.75.
• C)0.2.
• D)1.2.
• E)1.0.

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