Answer:
c. 1,250 million tazes
Explanation:
First we need to calculate the reserve ratio as follow
Reserve ratio = Required reserves / Total Deposits
Where
Required Reserves = 300 million tazes
Total Deposits = 7,500 million tazes
Placing values in the formula
Reserve ratio = 300 million tazes / 7,500 million tazes
Reserve ratio = 0.04
Reserve ratio = 4%
Now calculate the Money multiplier using following formula
Money Multiplier = 1 / Required reserves ratio
Placing values in the above formula
Money Multiplier = 1 / 4%
Money Multiplier = 1 / 0.04
Money Multiplier = 25
Calculate the Change in money Supply
Change in money supply = Value of treasury bond x Money Multiplier
Placing values in the formula
Change in money supply = 50 million tazes x 25
Change in money supply = 1,250 million tazes
