This Exercise Is Based on the Following Simplified Model of the Determination

This exercise is based on the following simplified model of the determination of the money stock.
$$\begin{array} { l } M = C + D \\C = 0.2 D \\R = 0.1 D \\H = R + C\end{array}$$ , Where M - money stock
C - currency in circulation
R - bank reserves
D - deposits of the public
H - high-powered money

If the money stock were $192 billion, what would bank reserves have to be

A) $11 billion
B) $18 billion
C) $17 billion
D) $12 billion
E) $16 billion

Correct Answer:

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