The banking system has $5,000 in reserve, $45,000 in loans, and $50,000 in deposits. Currently the reserve requirement is 10%. If the Fed lowers reserve requirement to 5%, what is the maximum amount of loans the banking system could make? |
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Ans $100,000
Amount of loans the banking system could make = Reserve available / Reserve Requirement Ratio
= 5000 / 5%
= $100,000
The banking system has $5,000 in reserve, $45,000 in loans, and $50,000 in deposits. Currently the...
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