Question

(Scenario: Money Creation) Scenario: Money Creation The reserve requirement is 20%. Leroy receives $1,000 as a graduation present and deposits the money in his checking account. The bank does NOT want to hold excess reserves. Look at the scenario Money Creation. Immediately after the deposit, reserves _____ and demand deposits _____ by $1,000.

Answer 1

"Increase"

"Increase by $1000"

Step-by-step explanation:

Immediately after the deposit, reserves "increase" and demand deposits increase by "$1,000"