Suppose that the Fed has set the reserve ratio at 10 percent and that banks collectively have
Question:
Suppose that the Fed has set the reserve ratio at 10 percent and that banks collectively have $2 billion in excess reserves. What is the maximum amount of new checkable-deposit money that can be created by the banking system?
a. $0
b. $200 million
c. $2 billion
d. $20 billion
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Related Book For
Macroeconomics
ISBN: 9781264112456
22nd Edition
Authors: Campbell McConnell, Stanley Brue, Sean Flynn
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