Mena receives a $1,000 check from her parents for her birthday,and she deposits this in a bank that faces a 10 percent reserve ratio.What is the consequence if the bank then deposits her check at the Federal Reserve?
A) Excess reserves increase by $1,000 and required reserves increase by $100.
B) Excess reserves increase by $900 and required reserves increase by $100.
C) Excess reserves increase by $1,000.
D) Required reserves increase by $1,000.
E) Reserves are not affected.
Correct Answer:
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