Multiple Choice
-Refer to Table 8.1. Suppose individuals in this country hold no cash. Assuming the bank's desired reserve ratio is 10 percent, what will be the banking system's deposits and reserves at the end of the money creation processes (ending with zero excess resources) ?
A) Deposits will be $200,000 and reserves will be $20,000.
B) Both deposits and reserves will be $200,000.
C) Deposits will be $2,000,000 and reserves will be $200,000.
D) Both deposits and reserves will be $2,000,000.
Correct Answer:
Verified
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