Use the Following to Answer Questions

question 386

Multiple Choice

Use the following to answer questions :
Scenario: Money Supply Changes
The reserve requirement is 10% and Jack withdraws $5,000 travel money from his checkable deposit. Assume that banks do not hold any excess reserves and that the public holds no currency, only checkable bank deposits.
-(Scenario: Money Supply Changes) Look at the scenario Money Supply Changes. As a result of the withdrawal, excess reserves _____ by _____.

• A)increase; $5,000
• B)increase; $500
• C)decrease; $4,500
• D)decrease; $500

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