The writing of a $1,000 check that is drawn on Bank A and deposited in Bank B
A) increases the money supply initially by $1,000.
B) reduces total reserves of Bank A by $1,000 and increases the total reserves of Bank B by the same amount.
C) reduces the required reserves of Bank A by $1,000 and increases the required reserves of Bank B by the same amount.
D) reduces the excess reserves of Bank A by $1,000 and increases the excess reserves of Bank B by the same amount.
Correct Answer:
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