Suppose the required reserve ratio is 10%. What is the maximum amount of money Big buck bank can create? 5 If the reserve ratio is increased to 14%, what is the maximum amount of money BBB can create? 3 If the reserve ratio is still at 10% and BBB chose to buy bonds instead of making loans with its excess reserves, what is the maximum amount of money BBB can create? From question #1 , if the prospective Loans and Bonds both paid interest of 6.8%, which strategy would be more profitable for BBB? If BBB decided to pursue #1 as a strategy, what is the maximum money making potential of the banking system (same reserve ratio 10%)?
Suppose the required reserve ratio is 10%. What is the maximum amount of money Big buck bank can create? 5 If the reserve ratio is increased to 14%, what is the maximum amount of money BBB can create? 3 If the reserve ratio is still at 10% and BBB chose to buy bonds instead of making loans with its excess reserves, what is the maximum amount of money BBB can create? From question #1 , if the prospective Loans and Bonds both paid interest of 6.8%, which strategy would be more profitable for BBB? If BBB decided to pursue #1 as a strategy, what is the maximum money making potential of the banking system (same reserve ratio 10%)?
Chapter14: Banking And The Money Supply
Section: Chapter Questions
Problem 2.3P
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- Suppose the
required reserve ratio is 10%. What is the maximum amount of money Big buck bank can create? 5 - If the reserve ratio is increased to 14%, what is the maximum amount of money BBB can create?
3 If the reserve ratio is still at 10% and BBB chose to buy bonds instead of making loans with its
- From question #1 , if the prospective Loans and Bonds both paid interest of 6.8%, which strategy would be more profitable for BBB?
- If BBB decided to pursue #1 as a strategy, what is the maximum money making potential of the banking system (same reserve ratio 10%)?
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