The Safe Bank receives an extra 100 of reserves but decides not to lend any of these

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The Safe Bank receives an extra €100 of reserves but decides not to lend any of these reserves out. How much deposit creation takes place for the entire banking system?

Unless otherwise noted, the following assumptions are made in all the remaining problems: the required reserve ratio on checkable deposits (current accounts) is 10%, banks do not hold any excess reserves and the public’s holdings of currency do not change.

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The Economics Of Money, Banking & Financial Markets

ISBN: 126161

1st Edition

Authors: Massimo Giuliodori, Frederic S. Mishkin Kent Matthews

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