What Is the Maximum Change in Total Deposits at Financial

question 5

Multiple Choice

What is the maximum change in total deposits at financial institutions if the Fed sells $120 billion of government securities to dealers,and the reserve requirement applicable to all deposits is 10%?

• A) $1.20 trillion decrease
• B) $133 billion increase
• C) $1.08 trillion increase
• D) $1.08 trillion decrease
• E) None of the above.

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