If a Bank Uses $200 of Excess Reserves to Make

question 33

Multiple Choice

If a bank uses $200 of excess reserves to make a new loan when the reserve ratio is 15 percent,this action by itself initially makes the money supply

• A)and wealth increase by $200.
• B)and wealth decrease by $200.
• C)increase by $200 while wealth does not change.
• D)decrease by $200 while wealth decreases by $200.

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Definitions:

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