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Economics

Assume the commercial banking system has checkable deposits of $20 billion and excess reserves of $2 billion at a time when the reserve ratio is 25 percent. If the reserve ratio is lowered to 20 percent, we can conclude that the:

A. Bank now has excess reserves of $3.2 billion
B. Bank now has neither an excess nor a deficiency of reserves
C. Maximum money-creating potential of the banking system has been increased by $7 billion
D. Board of Governors has decided that the economy is experiencing a high rate of inflation

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M965164

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