Suppose all of the banks in the Federal Reserve System have $100 billion in transactions accounts, the required reserve ratio is 0.25, and there are no excess reserves in the system. If the required reserve ratio is changed to 0.20, the total lending capacity of the system is increased by
A. $750 million.
B. $25 billion.
C. $10 billion.
D. $20 billion.
Answer: B
Economics
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