If the bank of canada requires banks to hold 5 percent of, Ask an Expert

Economics

uppose that the T-account for Nan Bank Inc. is as follows:

Assets Liabilities

Reserves $100,000

Loans $400,000 Deposits $500,000

If the Bank of Canada requires banks to hold 5 percent of deposits as reserves, how much in excess reserves does Nan Bank Inc. now hold?

Assume that all other banks hold only the required amount of reserves. If Nan Bank Inc. decides to reduce its reserves to only the required amount, by how much would the economy's money supply increase?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M975244

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