Question
Assume that a banking system as a whole has a required reserve ratio of 10 percent. If the banking system has demand deposit liabilities of
Assume that a banking system as a whole has a required reserve ratio of 10 percent. If the banking system has demand deposit liabilities of $500 billion and actual reserves of $55 billion, how much money can the banking system create (for simplicity, assume there is no cash leakage from the banking system)?
$20 billion.
$100 billion.
$5 billion.
$50 billion.
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