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Maximum amount of deposit and loan creation given the bank reserves and reserve requirement ratio.

The banking system has $150 Billion in reserves and the reserve requirement is 4%. Elucidate the maximum possible levels for deposits and loans also what would occur if the reserve requirement were raised? What would occur if people decided they wished to hold a higher proportion of their money in the form of currency and coin rather than bank deposits?

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M922098

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