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When $100 is deposited in the banking system, it leads to maximum expansion in bank deposits of $1,000. What is the required reserve ratio assuming that the excess reserves are 0 20% 10% O 5% 0%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

When $100 is deposited in the banking system, it leads to maximum expansion in
bank deposits of $1,000. What is the required reserve ratio assuming that the
excess reserves are 0
20%
10%
5%
0%

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I believe the answer is 2, but I'm not 100 percent.
1
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