Assume the reserve requirement is 10 percent, demand deposits are $200 million, and total reserves are $18 million. If the reserve requirement is increased to 14 percent, the banking system will have
A. An increase in the money multiplier.
B. Excess reserves equal to $18 million.
C. A deficiency of reserves equal to $10 million.
D. Excess reserves equal to $10 million.
Answer: C
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