Mr. Garrison has recently obtained a bank card from South Park National Bank. Excited about the concept of using a little plastic card to get money from a machine, he quickly runs down to the nearest ATM and withdraws $500. This action has:
A. increased the money supply by $500.
B. reduced the money supply by $500.
C. reduced the bank's required reserves by $25 assuming the reserve ratio is 5 percent.
D. not changed the money supply.
Answer: C
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