A commercial bank has excess reserves of $10,000 and a required reserve ratio of 20 percent.It grants a loan of $8,000 to a customer, who then writes out a check for $8,000 that is deposited in another bank.The first bank will find its reserves decrease by
A) $2,000.
B) $3,000.
C) $1,600.
D) $8,000.
Correct Answer:
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