People hold $521 million of bank deposits but no currency. Banks have made $324 million dollars...
People hold $521 million of bank deposits but no currency. Banks have made $324 million dollars of loans and are fully loaned up. If now the banks choose to hold $28 million more in reserves, by how many millions would bank loans fall if the Fed takes no action at all?
Round your answer to 2 decimal places. Do not include the unit of measurement in your answer. For example, if your answer is 1.23 millions, type 1.23 in the box, not 1,230,000.
Homework Answers
Deposit= $521
Loan= $324
Reserve=$521-$324=$197
Reserve ratio= $197/$521= .378
Change in reserve= $28
Bank loan will fall by the amount equal to 28/.378= $74.07
All figures are in million dollars.
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