Suppose a bank has $50,000 in deposits and $6,000 in reserves. The required reserve ratio is 10%. Which of the following occurs if the required reserve ratio is increased to 12%?

A) The bank's total reserves will fall.
B) The bank will now be fully loaned up.
C) The bank will have insufficient required reserves.
D) The bank's profit will fall.


Ans: B) The bank will now be fully loaned up.

Economics

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