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stion Completion Status: Path: Words QUESTION 3 Suppose that initially a bank has an excess reserves of $600 and the required
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A bank has excess reserve of amount $600 it means bank can gave loan of the entire $600.and now andy deposits $1200 to his checking account.now bank can loan this $1200 after maintaining 20% required reserve.the reserve is required as if anytime andy came to bank and want his money back then bank can gave it back.20% reserve the excess amount is $1200*(20/100)=$240.so after taking $240 reserve the excess amount is $1200-$240=$960 from the andy's deposit.but bank already has $600.so now bank has excess reserve ($960+$600)=$1560.from this bank give molly loan $500.so now bank can lend additionally($1560-$500)=$1060

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