In the Simple Deposit Expansion Model,if the Fed Purchases $100

question 154

Multiple Choice

In the simple deposit expansion model,if the Fed purchases $100 worth of bonds from a bank that previously had no excess reserves,deposits in the banking system can potentially increase by

• A)$10.
• B)$100.
• C)$100 times the reciprocal of the required reserve ratio.
• D)$100 times the required reserve ratio.

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