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Assume the following information for the entire banking system: Required Reserves Ratio =25% Actual Reserves =300b Currency held outside of the banking system = 1,200

Assume the following information for the entire banking system: Required Reserves Ratio =25% Actual Reserves =300b Currency held outside of the banking system = 1,200 Deposits = 1,100b If banks decide to hold ONLY required reserves, after all rounds of the multiplier and assuming there is no currency leak, the Money Supply will O increase by 100b increase by 25b O None of these answers is correct O increase by 1,200 b increase by 1,000b

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