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Consider a fractional reserve banking system where at least some the banks are in a position where no new loans can be issued without obtaining
Consider a fractional reserve banking system where at least some the banks are in a position where no new loans can be issued without obtaining additional reserves. If the discount rate is 8%, the federal funds rate is 4.7%, the three-month treasury bond rate is 2.5%, and the reserve ratio is 9 percent, how much more money, at most, could $1,418 of additional reserves create?
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