Question

If the Federal Reserve decreases the reserve rate from 4% to 2%, how does this affect the amount of money that would result because of fractional-reserve banking from an initial deposit into a bank of $55,000?
A. It increases the amount by $1,375,000.
B. It decreases the amount by $2,750,000.
C. It decreases the amount by $1,375,000.
D. It increases the amount by $2,750,000.

Answer 1

INCREASE THE AMOUNT OF 1;37500