Suppose a Bank Has Excess Reserves of $50 and the Reserve
Suppose a bank has excess reserves of $50 and the reserve ratio is 20%. If Andy deposits $5,000 of cash in his checking account and the bank lends $2,500 to Molly, the money supply:
A) is increased by $7,500.
B) is increased by $2,500.
C) remains unchanged.
D) is decreased by $5,000.