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Question
If a bond dealer sells a government bond to the Fed for $100,000, and the reserve ratio is 10 percent, then the bank that receives a $100,000 deposit from the dealer can expand its loans by, and the money supply can increase by as much as .
A) $80,000; $800,000
B) $10,000; $100,000
C) $90,000; $1,000,000
D) $90,000; $900,000
Answer
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