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Macroeconomics

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Moderate

Required Reserve Ratio

MACRO-JBKNE7

Assume that the required reserve ratio subject to a certain bank is 5%.

When the bank buys $100 million of Treasury bills,

A

the bank reduces its ability to take deposits by $1.9 billion.

B

the bank reduces its ability to make loans by $1.9 billion.

C

the bank reduces its ability to take deposits by $2 billion.

D

the bank increases its ability to take deposits by $2 billion.

E

the bank increases its reserves by $100 million.