When a banker accepts a deposit of $1,000 in cash and puts $200 aside as required reserves and then makes a loan of $800 to a new borrower, this set of transactions
A. decreases the money supply by $1,000.
B. decreases the money supply by $200.
C. does not change the money supply.
D. increases the money supply by $200.
E. increases the money supply by $800.
Answer: E
Economics
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