If required reserves are 20 per cent and the Reserve Bank buys $10,000 worth of government securities, what is the change in the banks' total reserves?
A) $8,000
B) $100,000
C) $20,000
D) $10,000
E) $2,000

Question

Quizplus · Accepted Answer

When the Reserve Bank buys $10,000 worth of government securities, it directly adds $10,000 to the banks' total reserves. The required reserve ratio does not affect this initial increase in reserves.

If Required Reserves Are 20 Per Cent and the Reserve