Assume That the Reserve Requirement Is 20% and the Federal

question 206

Multiple Choice

Assume that the reserve requirement is 20% and the Federal Open Market Committee buys a $10,000 bond. The impact on the banking system is a(n)

• A) injection of $10,000 in new reserves.
• B) reduction of $50,000 in reserves.
• C) injection of $50,000 in new reserves.
• D) injection of $2,000 in new reserves.

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