Consider a new deposit of $100 000 to the Canadian banking system.The commercial bank that initially receives this deposit will find itself with
A) no excess reserves if there is no reserve requirement.
B) $1000 of excess cash reserves if its target reserve ratio is 10%.
C) $2000 of excess cash reserves if its target reserve ratio is 2%.
D) $10 000 of excess cash reserves if its target reserve ratio is 10%.
E) $98 000 of excess cash reserves if its target reserve ratio is 2%.
Correct Answer:
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