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Suppose that the T-account for First National Bank is as follows:

Assets Liabilities

Reserves $100,000 Deposits $500,000

Loans 400,000

a. If the Fed requires banks to hold 5 percent of deposits as reserves, how much in excess of reserves does First National now hold?
b. Assume that all other banks only the required amount, by how much would the economy's money supply increase?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9488580

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