Use the Following to Answer Questions

question 357

Multiple Choice

Use the following to answer questions:
The reserve requirement is 10% and Jack withdraws $5000 travel money from his chequable deposit.Assume that banks do not hold any excess reserves and that the public holds no currency,only chequable bank deposits.
-(Scenario: Money Supply Changes) Refer to Scenario: Money Supply Changes.By how much must the bank's loans decrease as a result of the withdrawal?

• A) $5000
• B) $4500
• C) $500
• D) $0

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