Answer:
The right solution is "decrease by $50,000". A further explanation is description if provided below.
Explanation:
The given values:
Sell amount,
= 10,000
Reserve ratio,
= 20%
i.e.,
= 0.2
Now,
The decrease in money supply will be:
= [tex]\frac{Sell \ amount}{Reserve \ ratio}[/tex]
On substituting the values, we get
= [tex]\frac{10000}{0.2}[/tex]
= [tex]50,000[/tex] ($)
