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Scenario: Holding Cash
Suppose that the public holds 50% of the money supply in currency and the reserve requirement is 20%. Banks hold no excess reserves. A customer deposits $6,000 in her checkable deposit.
-(Scenario: Holding Cash) Look at the scenario Holding Cash. As a result of the deposit, required reserves will increase by:
A) $0.
B) $1,200.
C) $3,000.
D) $6,000.
Correct Answer:
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