If the Currency Drain Is Zero, Which of the Following

question 350

Multiple Choice

If the currency drain is zero, which of the following situations leads to the greatest total increase in the quantity of money?

• A) an increase in the monetary base of $100,000 when the desired reserve ratio is 5 percent
• B) an increase in the monetary base of $120,000 when the desired reserve ratio is 10 percent
• C) an increase in the monetary base of $200,000 when the desired reserve ratio is 20 percent
• D) an increase in the monetary base of $250,000 when the desired reserve ratio is 15 percent
• E) an increase in the monetary base of $100,000 when the desired reserve ratio is 50 percent

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