If Reserves Increase by $50 Billion and the Required Reserve

question 49

Multiple Choice

If reserves increase by $50 billion and the required reserve ratio is 8%,what is the resulting change in checkable deposits (or the money supply) ,assuming that there are no cash leakages and that banks hold zero excess reserves?

• A) $40 billion
• B) $400 billion
• C) $62.5 billion
• D) $625 billion

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