Assume that reserve ratio is 0.1 and cash-ratio is 0.1. An initial deposit of $1000 will eventually lead to one of the following outcomes:
A) Total loan-creation of $10,000.
B) Total deposit-creation of $10,000.
C) Total loan-creation of $5,000.
D) Total deposit-creation of $5,000.
Correct Answer:
Verified
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