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QUESTION
When $1 million is deposited at a bank, the required reserve ratio is 20 percent, and the bank chooses not to hold any excess reserves but makes loans instead, then, in the bank's final balance sheet,
When $1 million is deposited at a bank, the required reserve ratio is 20 percent, and the bank chooses not to hold any excess reserves but makes loans instead, then, in the bank's final balance sheet,
a. the liabilities of the bank increase by $1,000,000.
b. reserves increase by $200,000.
c. loans increase by $1,000,000
d. only a and b of the above occur?
