Suppose the required reserve ratio is 0.1 and Linda deposits $4,000 in cash at the College State Bank. If the bank held no excess reserves before Linda's deposit and now increases its reserves by $500, which of the following is true?
a. The bank must have lent out an additional $4,000.
b. $500 is the value of the bank's required reserves
c. The bank now has excess reserves of $100.
d. Both the bank's assets and its liabilities rise by $500.
e. The bank now has $500 in excess reserves.
c
Economics
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