If the required reserve ratio in the banking system is 10% and the Fed sells $1,000 in U.S. bonds, what will happen to supply?
A) It will increase by as much as $5,000.
B) It will decrease by as much as $5,000.
C) It will increase by as much as $10,000.
D) It will decrease by as much as $10,000.
E) It will remain unchanged.
Correct Answer:
Verified
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