Assume that banks do not hold excess reserves, all deposits remain in the banking system and that the required reserve ratio is 20%. If one bank obtains excess reserves of $10,000, then the maximum increase in money supply is
A) $10,000.
B) $20,000.
C) $40,000.
D) $50,000.
Ans: D) $50,000.
Economics
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The aggregate supply curve shifts rightward when
A) the money wage rate falls. B) government purchases increase. C) potential GDP decreases. D) income taxes increase. E) the money wage rate rises.
Economics