If Reserves Increase by $4 Million and the Required Reserve

question 100

Multiple Choice

If reserves increase by $4 million 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)$3.2 million
• B)$3.7 million
• C)$5 million
• D)$50 million