Suppose you found 1,000 hidden in your mattress and deposited it ...

[mcmcdaniel]

Suppose you found 1,000 hidden in your mattress and deposited it in a demand deposit account at your bank. If the reserve requirement was 20 percent, the deposit would directly create ____ in excess reserves and ultimately lead to a ____ total increase in the money supply, if all banks in the system lend out 100 percent of their excess reserves.
 a. 800; 4,000
 b. 800; 5,000
 c. 1,000; 4,000
  d. 1,000; 5,000

Question 2

The introduction of a new currency is generally sufficient to achieve a permanent reduction in the inflation rate.
 a. True
  b. False
  Indicate whether the statement is true or false

[jazzlynnnnn]

Answer to Question 1

b

Answer to Question 2

False