Consider a situation where the reserve ratio is 20% and the cash-ratio is zero. If the cash-reserves in the banking system are $10 billion with zero excess reserves, then:
A) the total loans in the banking system are $50 million.
B) the total loans in the banking system are $40 million.
C) the total loans in the banking system are $60 million.
D) the total deposits in the banking system are $60 million.
Correct Answer:
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