8. The Fed buys $2 million of securities from AIG. If AIGs bank has a desired reserve...

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8. The Fed buys $2 million of securities from AIG. If AIG’s bank has a desired reserve ratio of 0.1 and there is no currency drain, calculate the bank’s excess reserves as soon as the open market purchase is made, the maximum amount of loans that the banking system can make, and the maximum amount of new money that the banking system can create.

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Essential Foundations Of Economics

ISBN: 9780520219465

7th Global Edition

Authors: Bade, Robin;Parkin, Michael

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