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1. If no decent lending opportunity arises in the econ- omy, and the central bank pays...

1. If no decent lending opportunity arises in the econ- omy, and the central bank pays an interest rate on reserves that is similar to other low-risk invest- ments, do you think banks will be willing to hold large amounts of excess reserves.

2.Explain how the net interest margin (NIM) would respond to increased competition for funds by the financial intermediation industry.

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