Suppose a bank has excess reserves of $50 and the reserve ratio is 20%.If Andy deposits $5 000 of cash in his chequing account and the bank lends $2 500 to Molly,the money supply:
A) is increased by $7 500.
B) is increased by $2 500.
C) remains unchanged.
D) is decreased by $5 000.
Correct Answer:
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