Refer to the information. With the $40 billion deposit, the banking system will be able to expand the money supply through loans by:

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.

A.   $128 billion.
B.  $200 billion.
C.  $40 billion.
D.   $160 billion.


D.   $160 billion.