Assume that the Paris First National Bank currently has deposits of $20 million. If the current required reserve ratio is raised from 20 percent to 40 percent, then:
a. Paris First National Bank does not have to comply with the Federal Reserve mandate.
b. required reserves will decrease from $16 million to $12 million.
c. excess reserves will automatically increase by $20 million.
d. Paris First National Bank must close out 4 million in loans.
e. Paris First National Bank must increase its required reserves from $4 million to $8 million.
e
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