Angus Bank holds no excess reserves but complies with the reserve requirement. The required reserves ratio is
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Angus Bank holds no excess reserves but complies with the reserve requirement. The required reserves ratio is 9%, and reserves are currently $27 million. Determine the amount of deposits, the reserve shortage created by a deposit outflow of $5 million, and the cost of the reserve shortage if Angus Bank borrows in the federal funds market (assume the federal funds rate is 0.25%).
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Economics of Money Banking and Financial Markets
ISBN: 978-0134733821
12th edition
Authors: Frederic S. Mishkin
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