If the U.S. government decreased its holdings of Mexican pesos, definitely
A) the capital and financial account would increase.
B) the capital and financial account would decrease.
C) there would be an increase in U.S. official reserves.
D) there would be a decrease in U.S. official reserves.
Question 2
Suppose Bank A holds 200 of reserves, has deposits of 1000, and the desired reserve ratio is 20 percent. How many deposits can Bank A create?
A) zero, because Bank A has no excess reserves
B) 200
C) 800
D) 400
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