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Assume the Fed Purchases a Government Security from a Private

Question 148

Multiple Choice

Assume the Fed purchases a government security from a private dealer and pays with a Fed check of $100,000. If this check is deposited by the dealer in a bank with a 10 percent required reserve ratio, the bank can extend new loans in the amount of:


A) $20,000.
B) $90,000.
C) $100,000.
D) $120,000.

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