Assume that the required reserve ratio is 20%. A business deposits a $50,000 check at Bank A; the check is drawn against Bank B. What happens to the reserves at Bank A and Bank B?
A. increase by $10,000 at Bank A and decrease by $50,000 at Bank B
B. increase by $50,000 at Bank A and decrease by $50,000 at Bank B
C. Reserves stay the same in both banks.
D. increase by $10,000 at Bank A and decrease by $10,000 at Bank B
Answer: B
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