If we assume a ten percent required reserve rate, and banks not holding any excess reserves and no change in currency holdings, an open market sale of $5 million of U.S. Treasury securities by the Fed, will result in deposits:
A. decreasing by $50 million.
B. increasing by $5 million.
C. not changing.
D. increasing by $50 million.
Answer: A
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Indicate whether the statement is true or false
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