Calculate the banking systems excess reserves. If the banks use all of these excess reserves to make

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Calculate the banking system’s excess reserves. If the banks use all of these excess reserves to make loans, what is the quantity of loans and the quantity of total deposits immediately after the banks have made these loans?

Use Table 1, which shows the balance sheet of the banking system (aggregated over all the banks). The desired reserve ratio on all deposits is 5 percent and there is no currency drain.

Table 1:

TABLE 1 Assets (millions of dollars) Reserves at the Fed Liabilities 25 Cash in vault 15 Securities 60 Loans

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Foundations Of Economics

ISBN: 9780134486819

8th Edition

Authors: Robin Bade, Michael Parkin

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