Answer the Question on the Basis of the Following Information

Answer the question on the basis of the following information about a banking system: new currency deposited in the system = $40 billion;legal reserve ratio = 0.20;excess reserves prior to the currency deposit = $0. Refer to the information.The $40 billion deposit of new currency will support total checkable deposits of:

A) $160 billion.
B) $200 billion.
C) $40 billion.
D) $128 billion.

Correct Answer:

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