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Question: Suppose the required reserve ratio is .12 and individuals hold no cash. Total bank deposits are $75 million and the banks hold $15 million in reserves. How much more money can the banking system create if it does not hold excess reserves? A. $35 million B. $50 million C. $125 million D. $510 million

Question: Suppose the required reserve ratio is .12 and individuals hold no cash. Total bank deposits are $75 million and the banks hold $15 million in reserves. How much more money can the banking system create if it does not hold excess reserves? A. $35 million B. $50 million C. $125 million D. $510 million

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question: Suppose the required reserve ratio is .12 and individuals hold no cash. Total bank deposits are $75 million and the banks hold $15 million in reserves. How much more money can the banking system create if it does not hold excess reserves? A. $35 million B. $50 million C. $125 million D. $510 million
Transcribed Image Text:Question: Suppose the required reserve ratio is .12 and individuals hold no cash. Total bank deposits are $75 million and the banks hold $15 million in reserves. How much more money can the banking system create if it does not hold excess reserves? A. $35 million B. $50 million C. $125 million D. $510 million
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