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Answer the next question on the basis of the following consolidated balance sheet of the commercial banking system. Assume that the reserve requirement is
Answer the next question on the basis of the following consolidated balance sheet of the commercial banking system. Assume that the reserve requirement is 20%. All figures are in billions. Liabilities & Net Worth (billions of Assets (billions of dollars) dollars) Reserves $200 Checkable deposits Securities 300Stock shares Loans 500 $1000 400 Property 400 Suppose the Fed wants to increase the money supply by $1,000 billion to drive down interest rates and stimulate the economy. To accomplish this, it could lower the reserve requirement from 20% to A) 12% B) 15% C) 14% D) 10%
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