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31 October, 06:51

Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 10 percent. If the Federal Reserve raises the required reserve ratio to 15 percent, then the bank will now have excess reserves of

A) $0

B) $2 million

C) $8 million

D) $10 million

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Answers (1)
  1. 31 October, 09:12
    0
    A) $0

    Explanation:

    with 100 million in checking account, and required reserve ratio in 10%

    the bank need to hold 10 millions

    IFthe Federal Reserve raises the required reserve ratio to 15% then it will need hold 15 millions

    This bank has none excess reserves
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