Question

Riley deposits $4,000 cash in her checkable deposit at Fershur Bank. If the desired reserve ratio is 5 percent, Fershur Bank's
A) desired reserves increase by $4,000.
B) assets and its liabilities change in opposite directions.
C) desired reserves increase by $200 and its excess reserves increase by $3,800.
D) excess reserves increase by $4,000.
E) liabilities do not change but its assets increase.

Answer

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