Suppose that Jonathon deposits $200 cash in Main Street Bank. Assume that this deposit represents new money entering the system. It is not, for example, withdrawn from another bank. Also assume the reserve requirement is 20% and that banks do not hold excess reserves. When the expansion/contraction process is complete, which of the following statements accurately reflects the changes that occur in the banking system?
A. Other banks in the system will experience larger increases in reserves than Main Street Bank.
B. The total increase in deposits in the banking system will equal $1,000.
C. The total amount of new lending in the banking system will be $400.
D. As other banks are affected, Main Street Bank may find itself short reserves.
E. Main Street Bank's reserves increase by $160 and its loans increase by $40.