If bank reserves are 200,the public holds 400 in currency,and the desired reserve-deposit ratio is 20%,deposits are ________ and the money supply is ________.
A) 200;600
B) 400;800
C) 600;1,000
D) 1,000;1,400
E) 2,400;2,800

Question

Quizplus · Accepted Answer

Deposits are calculated by dividing bank reserves by the reserve-deposit ratio: 200 / 0.2 = 1,000. The money supply is the sum of deposits and currency held by the public: 1,000 + 400 = 1,400.

If Bank Reserves Are 200,the Public Holds 400 in Currency,and