The Following Is Information About a Banking System: New Currency

question 191

Multiple Choice

The following is information about a banking system: new currency deposited in the system = $40 billion;desired reserve ratio = 20%;excess reserves prior to the new currency deposit = $0.
-Refer to the above information.The banking system will be able to expand the money supply through loans by:

• A) $160 billion.
• B) $200 billion.
• C) $40 billion.
• D) $128 billion.

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