Assuming that households do not change their cash holdings and banks loan out all of their excess reserves,if the required reserve ratio (RRR) is 20 percent and the Fed purchases $2,000 worth of bonds from banks,how much money will be eventually created?
A) $1,800
B) $2,000
C) $10,000
D) $18,000
E) $20,000
Correct Answer:
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