Assume all banks in the system started have a 10 percent required reserve ratio and the Fed made a $20,000 open market purchase. The result would be a(n):
A. $200,000 expansion of the money supply.
B. $20,000 expansion of the money supply.
C. $20,000 contraction of the money supply.
D. infinite contraction of the money supply.
Answer: A
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