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A commercial bank has $1,000 in reserves, $ 9,000 in loans and $10,000 of deposits. Answer the following questions: If the reserve requirement is 10%,
A commercial bank has $1,000 in reserves, $ 9,000 in loans and $10,000 of deposits. Answer the following questions: If the reserve requirement is 10%, what is the banks reserve position? If the FED raised the reserve requirement to 20%, how would this effect the banks reserve position? If the bank complies with the new reserve requirements (20%), what is the banks new equilibrium reserve position?
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