Suppose all banks have zero excess reserves. An individual buys bonds for $1000000 (using money from...

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Suppose all banks have zero excess reserves. An individual buys bonds for $1000000 (using money from their safety deposit box) and a bond dealer deposits the cheque in his or her bank. The desired reserve ratio is 10 percent. The bank loans out the maximum it is allowed to a local business. The business writes a cheque for the full amount for supplies, which is then deposited in another (second) bank. The largest loan the second bank can make is $________million. Round your final answers to 2 decimal places, if necessary. Do not enter the comma "," a dollar sign ($) or units (Zeros or millions) while entering your answer. Suppose all banks have zero excess reserves. An individual buys bonds for $1000000 (using money from their safety deposit box) and a bond dealer deposits the cheque in his or her bank. The desired reserve ratio is 10 percent. The bank loans out the maximum it is allowed to a local business. The business writes a cheque for the full amount for supplies, which is then deposited in another (second) bank. The largest loan the second bank can make is $________million. Round your final answers to 2 decimal places, if necessary. Do not enter the comma "," a dollar sign ($) or units (Zeros or millions) while entering your answer.

Answer rating: 100% (QA)

Heres how to find the largest loan the second bank can make Deposit at Second Ba... View the full answer