If the reserve ratio is 5 percent and a bank receives a new deposit of $500, this bank
A.       must increase its required reserves by $25.
B.       will initially see its total reserves increase by $500.
C.       will be able to make a new loan of $475.
D.       All of the above are true.
Answer:D
If the reserve ratio is 5 percent and a bank receives a new deposit of $500, this bank
A.       must increase its required reserves by $25.
 B.       will initially see its total reserves increase by $500.
 C.       will be able to make a new loan of $475.
 D.       All of the above are true.
