Suppose the State Bank purchases a Rs 1,000 government bond from you. If you deposit the entire Rs 1,000 in you bank what is the total potential change in the money supply as a result of the State Bank’s action if the your bank’s reserve ratio is 20 percent?

1. A Option A: Rs 4,000
2. B Option B: Rs 5,000
3. C Option C: Rs 1,000
4. D Option D: Rs 0