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Suppose that a bank with no excess reserves receives a deposit into a checking account of $19,000 in currency. If the require
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Answer #1

The increase in the deposit in the checking account= $19000

Required Reserve Ratio= 0.07

Money Multiplier= 1/ Required Reserve Ratio= 1/0.07= 14.29.

The maximum amount that the bank can lend out= money multiplier × the increase in the deposit in the checking account

The Maximum amount that the bank can lend out= 14.29×19000= $271510

The maximum amount that the bank can lend out= $271510

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