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4.Q1_ I don't know how to do it. Question 4: d a (a) Suppose that banks hold five percent of deposits as cash reserves and

4.Q1_ I don't know how to do it.

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Question 4: d a (a) Suppose that banks hold five percent of deposits as cash reserves and that the public holds no cash {all money is held as bank deposits). Show the effect of a $150 deposit. Be sure to show the mechanics of the system, and the nal balances for (i) deposits, (ii) cash reserves, and (iii) loans.

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