The Money Multiplier Process Loan Loan Loan Initial etc. deposit ($100) University Bank Deposit Bank #2 Deposit Bank #3 Bank Deposit #4 Excess reserves: $25 Required reserves: $75 Excess reserves: $6.25 Required reserves: $18.75 Excess reserves: $1.56 Required reserves: $4.69 Excess reserves: $0.39 Required reserves: $1.17 a. What volume of loans can the banking system in the figure support? b. If the reserve requirement were 80 percent rather than 75 percent, what would the system's lending capacity be?
The Money Multiplier Process Loan Loan Loan Initial etc. deposit ($100) University Bank Deposit Bank #2 Deposit Bank #3 Bank Deposit #4 Excess reserves: $25 Required reserves: $75 Excess reserves: $6.25 Required reserves: $18.75 Excess reserves: $1.56 Required reserves: $4.69 Excess reserves: $0.39 Required reserves: $1.17 a. What volume of loans can the banking system in the figure support? b. If the reserve requirement were 80 percent rather than 75 percent, what would the system's lending capacity be?
Chapter4: Operating Activities: Sales And Cash Receipts
Section: Chapter Questions
Problem 3.6C
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