Answer the next question on the basis of the following table for a commercial bank or thrift:(1)(2)(3)Legal Reserve Ratio (%)Checkable DepositsActual Reserves10$40,000$10,0002040,00010,0002540,00010,0003040,00010,000Refer to the above table. If the legal reserve ratio falls from 25 percent to 10 percent, excess reserves of this single bank will:
A. fall by $6,000 and the monetary multiplier will decline from 30 to 10.
B. rise by $6,000 and the monetary multiplier will increase from 4 to 10.
C. rise by $60,000 and the monetary multiplier will increase from 4 to 10.
D. fall by $2,000 and the monetary multiplier will decline from 10 to 4.
Answer: B
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