If the Reserve Requirement Is 5 Percent,a Bank Desires to Hold

question 69

Multiple Choice

If the reserve requirement is 5 percent,a bank desires to hold no excess reserves,and it receives a new deposit of $10,then this bank

• A)must increase its required reserves by $10.
• B)will initially see its total reserves increase by $10.50.
• C)will be able to make new loans up to a maximum of $9.50.
• D)All of the above are correct.

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