When a Banker Accepts a Deposit of $1,000 in Cash

question 55

Multiple Choice

When a banker accepts a deposit of $1,000 in cash and puts $200 aside as required reserves and then makes a loan of $800 to a new borrower, this set of transactions

• A) decreases the money supply by $1,000.
• B) decreases the money supply by $200.
• C) does not change the money supply.
• D) increases the money supply by $200.
• E) increases the money supply by $800.

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Definitions:

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