Assume that the Federal Reserve has purchased a $1,000 security from a
Assume that the Federal Reserve has purchased a $1,000 security from an individual, the required reserve ratio is 20 percent, and that individual deposits the proceeds in his bank. What is the increase in excess reserves for this bank?
a. $200
b. $1,000
c. $1,200
d. $800
e. $2,000
ANSWER
D
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