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Reserve Ratio and Money Supply

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Assuming a 15% reserve ratio, an increase in deposits of $300,000 could eventually result in:

A) a $2 million increase in the money supply.
B) a $345,000 increase in the money supply.
C) a $45,000 increase in the money supply.
D) a $1.5 million increase in the money supply.
E) there would be no change in the money supply.

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Solution Summary

The reserve ratio and money supply for increase deposits are given.

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