In Macroland,there Is $2,000,000 in Currency

question 40

Multiple Choice

In Macroland,there is $2,000,000 in currency.The public holds half of the currency and banks hold the rest as reserves.If the banks' desired reserve-deposit ratio is 5%,deposits in Macroland equal ________ and the money supply equals _______.

• A) $2,000,000;$2,100,000
• B) $20,000,000;$21,000,000
• C) $20,000,000: $22,000,000
• D) $40,000,000;$40,000,000
• E) $40,000,000;$42,000,000

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