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Suppose Fred deposits $8,000 in cash into his checking account at the Bank of Bonzo. The Bank of Bonzo has no excess reserves and is subject to a 5 percent required reserve ratio. What is the maximum amount of deposits that can be created from Fred’s initial deposit? What is the maximum amount of loans that can be created from Fred’s initial deposit?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91236085

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