2. Consider a situation in which the required reserve ratio is 15 percent and each bank individually

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2. Consider a situation in which the required reserve ratio is 15 percent and each bank individually decides to hold 5 percent of every deposit against emergency with¬ drawals, in addition to the legally man¬ dated reserves. There is no holding of cash. What happens to total banking sys¬ tem deposits if an open market purchase of $500,000 occurs?

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