Answer the question on the basis of the following information about a banking system: new
currency deposited in the system = $40 billion; legal reserve ratio = 0.20; excess reserves
prior to the currency deposit = $0.
currency deposited in the system = $40 billion; legal reserve ratio = 0.20; excess reserves
prior to the currency deposit = $0.
A. $160 billion.
B. $200 billion.
C. $40 billion.
D. $128 billion.
ANSWER
B. $200 billion.