DSE 17-31

The following table shows the balance sheet of a banking system.

Suppose the public does not hold cash and the required reserve ratio is reduced to 25%. After deposit creation, the amount of loans in the bankind system is $750. Which of the following statements about the banking system is correct?

A. The money supply increases by $300.

B. The actual banking multiplier is 3.5.

C. The deposits increase by $600.

D. Bank reserves are $450.