Multiple Choice
Suppose you found $5,000 hidden in your closet and deposited it in a demand deposit account at your bank. If the reserve requirement was 10 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) $500; $5,000
B) $4,500; $5,000
C) $4,500; $45,000
D) $4,500; $50,000
Correct Answer:
Verified
Correct Answer:
Verified
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