Consider a new deposit of $10 000 to the Canadian banking system. The 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 percent.
C) $2000 of excess cash reserves if its target reserve ratio is 10 percent.
D) $8000 of excess cash reserves if its target reserve ratio is 20 percent.
E) $10 000 of excess cash reserves if its target reserve ratio is 100 percent.
Correct Answer:
Verified
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