Suppose a Bank Has $100 Million in Checking Account Deposits

question 197

Multiple Choice

Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 20 percent.If the Federal Reserve reduces the required reserve ratio to 15 percent,then the bank will now have excess reserves of

• A)$0.
• B)$5 million.
• C)$15 million.
• D)$20 million.

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Definitions:

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