Multiple Choice
On a certain date the banking system had $2 billion in excess reserves.The legally required reserve ratio was 12.5 percent.Potentially, if these funds were fully loaned out, the banking system as a whole could increase the money supply by a maximum of:
A) $2 billion.
B) $2.5 billion.
C) $12.5 billion.
D) $16 billion
E) $25 billion.
Correct Answer:
Verified
Correct Answer:
Verified
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