If the Central Bank of Macroland Puts an Additional 1,000

question 56

Multiple Choice

If the Central Bank of Macroland puts an additional 1,000 units of currency into the economy, the public deposits all currency into the banking system, and banks have a desired reserve/deposit ratio of 0.10, then the banks will eventually make new loans totaling ______ and the money supply will increase by _______.

• A) $1,000; $1,000
• B) $9,000; $9,000
• C) $9,000; $10,000
• D) $1,000; $9,000

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Definitions:

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