Table 29-6. -Refer to Table 29-6. Assume the Fed's Reserve Requirement Is

question 71

Multiple Choice

Table 29-6.
-Refer to Table 29-6. Assume the Fed's reserve requirement is 5 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 5 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Pleasantville decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase?

• A)$10,833.33.
• B)$13,000.
• C)$8,333.33.
• D)$10,000.

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