1z * 35Suppose that in a country the total holdings of banks were as follows: totalreserves (required reserves + excess reserves) = unknown, loans = $855million, deposits = $900 millionThese are the only assets and liabilitiesAssume that people hold no currency. Based on the required reserve ratioin the previous question, what is the maximum amount of total moneysupply that can be created from the deposit?90,000 million22,500 million45,000 million30,000 million

The money supply is the supply of currency in an economy. The M1 money supply is the summation of…

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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Question

* 35
Suppose that in a country the total holdings of banks were as follows: total
reserves (required reserves + excess reserves) = unknown, loans = $855
million, deposits = $900 million
These are the only assets and liabilities
Assume that people hold no currency. Based on the required reserve ratio
in the previous question, what is the maximum amount of total money
supply that can be created from the deposit?
90,000 million
22,500 million
45,000 million
30,000 million

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