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Suppose a bank has a reserve requirement of 5 percent. The bank does not hold excess reserves. If the bank receives a new deposit of

Suppose a bank has a reserve requirement of 5 percent. The bank does not hold excess reserves. If the bank receives a new deposit of $ 400, then this bank?

a. must increase required reserves by $20.

b. will initially see reserves increase by $40.

c. will be able to use this deposit to make new loans amounting to $360.

d. will be able to use this deposit to make new loans amounting to $400.

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