If Reserves Increase by $7 Million and the Required Reserve

question 36

Multiple Choice

If reserves increase by $7 million and the required reserve ratio is 12%,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)$0.84 million
• B)$7.95 million
• C)$5.83 million
• D)$58.33 million

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