DSE 15-29

Refer to the following balance sheet of a banking system. The required reserve ratio is 20%.

If the central bank issues newly printed banknotes worth $200 million, the cash held by the non-bank public will increase by $100 million and the money supply will increase by $500 million. The total amount of excess reserves in the banking system will then be __________.

A. $100 million

B. $120 million

C. $280 million

D. $400 million