Sayed receives a bonus check from his employer for $10,000,and he deposits this in a bank that faces a 20 percent reserve ratio.What is the consequence if the bank then deposits his check at the Federal Reserve?
A) Excess reserves increase by $10,000.
B) Excess reserves do not increase and required reserves increase by $2,000.
C) Reserves are not affected.
D) Excess reserves increase by $10,000 and required reserves increase by $2,000.
E) Excess reserves increase by $8,000 and required reserves increase by $2,000.
Correct Answer:
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