$\backslash$table$[[$Assets$,,$Liabilities and Net Worth$],[,($Billions of Dollars$),,],[$Total reserves,$10,$Checkable deposits,$25],[$Loans$,5,,],[$Securities$,10,,],[$Total$,25,$Total,$25]]$

What is the reserve ratio?

$40\%$

$10\%$

$5\%$

$25\%$

Suppose that the Federal Reserve $($the "Fed"$)$ sells $$3$ million of bonds to a bond dealer, who pays the Fed by wrifing a check against the funds in her checking account. What is the initial impact of this transaction?

Checkable deposits fall by $$3$ million, and the banking system's holdings of securities fall by $$3$ million.

The banking system's holdings of securities fall by $$3$ million, and the banking system's total reserves rise by $$3$ million.

The banking system's holdings of securities rise by $$3$ million, and the banking system's total reserves fall by $$3$ million.

Checkable deposits fall by $$3$ million, and the banking system's total reserves fall by $$3$ million.

As a result of the Fed's sale of $$3$ million of securities$,$ checkable deposits in the banking system can potentially $$ by as much as