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Suppose commercial banks have no excess reserves. Then new deposits totaling $1 billion come into the banking system. The required reserve ratio is...

Suppose commercial banks have no excess reserves. Then new deposits totaling $1 billion come into the banking system. The required reserve ratio is 20 percent. What is the maximum amount by which banks can increase deposits in the entire banking system? 
 
A. $5.0 billion

B. $0.5 billion

C. $2.5 billion

D. $2.0 billion



Prior to the "revolution" in economic thinking introduced by John Maynard Keynes, the "classical" economists had argued that:

A. a market economy would produce many "great depressions."

B. a market economy did not necessarily generate full employment in the long run.

C. a market economy is inherently stable and would always lead to full employment in the long run.

D. a market economy was inferior to a centrally-planned economy.

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