If reserves in the banking system increase by $1 billionbecause the Fed lends $1 billion to financial institutions,and checkable deposits increase by $9 billion, why isn’tthe banking system in equilibrium? What will continue tohappen in the banking system until equilibrium is reached?Show the T-account for the banking system in equilibrium.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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If reserves in the banking system increase by $1 billion
because the Fed lends $1 billion to financial institutions,
and checkable deposits increase by $9 billion, why isn’t
the banking system in equilibrium? What will continue to
happen in the banking system until equilibrium is reached?
Show the T-account for the banking system in equilibrium.

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