Suppose the reserve requirement ratio is 20 percent.Assuming no bank holds excess reserves and nobody withdraws cash,a $10,000 injection of new reserves by the Fed can create:
A) $2,000 in new checkable deposits.
B) $10,000 in new checkable deposits.
C) $50,000 in new checkable deposits.
D) $500,000 in new checkable deposits.
E) $5,000 in cash.
Correct Answer:
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