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Suppose All of the Banks in the Federal Reserve System

Question 55

Multiple Choice

Suppose all of the banks in the Federal Reserve System have $500 billion in transactions accounts,the required reserve ratio is 0.30,and there are no excess reserves in the system.If the required reserve ratio is changed to 0.25,the total lending capacity of the system is increased by


A) $1 billion.
B) $30 billion.
C) $25 billion.
D) $100 billion.

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