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Assume the overall banking system has $750 million in excess reserves and the current required reserve ratio is 10%. If the FED then raises the
Assume the overall banking system has $750 million in excess reserves and the current required reserve ratio is 10%. If the FED then raises the required reserve ratio from 10% to 14% (and assuming that there are no leakages in the banking system other than the required reserve requirement), how much will excess reserves change by in the overall banking system? Show all work. Carry all calculations out to four (4) decimal places. Highlight in bold your answer. [Note: watch your signs (+ / -)]
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