A banking system has deposits of $1000, loans of $800, and reserves of $200. The central bank has just raised the reserve ratio to 0.25. Imagine loans are paid back with deposits. Calculate the value of loans the banks could recall to comply with this change in the reserve ratio. Do not include a dollar sign ($) in your answer and round all money answers to 2 decimal places, if required.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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A banking system has deposits of $1000, loans of $800, and reserves of $200. The central bank has just raised the reserve
ratio to 0.25. Imagine loans are paid back with deposits. Calculate the value of loans the banks could recall to comply with
this change in the reserve ratio. Do not include a dollar sign (S) in your answer and round all money answers to
2 decimal places, if required.
Transcribed Image Text:A banking system has deposits of $1000, loans of $800, and reserves of $200. The central bank has just raised the reserve ratio to 0.25. Imagine loans are paid back with deposits. Calculate the value of loans the banks could recall to comply with this change in the reserve ratio. Do not include a dollar sign (S) in your answer and round all money answers to 2 decimal places, if required.
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