For the following question, assume the following facts: (1) Chase (which is located in the United States)
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Question:
For the following question, assume the following facts:
(1) Chase (which is located in the United States) has a 20% reserve requirement imposed by the government.
(2) Bank of Germany has no reserve requirements.
(3) Both banks may invest at an 8% interest rate.
(4) Both banks have fixed costs of $3 per deposit made.
What is the difference between the minimum interest rates each bank can offer and still make a profit if the deposit is $500 for 1 year?
Expert Answer:
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