A depositor places $5,000 in cash in a commercial bank, and the reserve ratio is 20 percent; the bank sends the $5,000 to the Federal Reserve Bank. As a result, the reserves and excess reserves of the bank have been increased, respectively, by:
A) $5,000 and $1,000
B) $5,000 and $4,000
C) $5,000 and $5,000
D) $4,000 and $4,000
Correct Answer:
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