If a bank sells a $1,000 security to the Fed and the required reserve ratio is 10 percent, _____
A) the bank has $1,000 in additional reserves, of which it can lend $800.
B) the bank has $1,000 in additional reserves, of which it can lend $900.
C) the bank has lost an asset and must reduce its loans.
D) the bank has lost a liability.
E) there is no change in excess reserves, since net assets do not change.
Correct Answer:
Verified
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