Suppose a bank has $100,000 in checking account deposits with no excess reserves and the required reserve ratio is 5 percent. If the Federal Reserve lowers the required reserve ratio to 3 percent, then the bank will now have excess reserves of
A) $0.
B) $2,000.
C) $3,000.
D) $5,000.
Answer: B
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What will be an ideal response?
Which of the following products would be sold in a competitive market?
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