Multiple Choice
Suppose you found $2,000 hidden in your mattress and deposited it in a demand deposit account at your bank. If the reserve requirement was 25 percent, the deposit would directly create ____ in excess reserves and ultimately lead to a ____ total increase in the money supply, if all banks in the system lend out 100 percent of their excess reserves.
A) $2,000; $8,000
B) $2,000; $6,000
C) $1,500; $8,000
D) $1,500; $6,000
Correct Answer:
Verified
Correct Answer:
Verified
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