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Assume that no banks hold excess reserves, and the public holds no currency. If a bank sells a $100 security to the Fed, explain what
Assume that no banks hold excess reserves, and the public holds no currency. If a bank sells a $100 security to the Fed, explain what happens to this bank and two additional steps in the deposit expansion process, assuming a 10% reserve requirement. How much do deposits and loans increase for the banking system when the process is completed?
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