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If a bank has $200,000 of deposits, a required reserve ratio of 20%, and it holds $80,000 in reserves, what is the maximum deposit outflow
If a bank has $200,000 of deposits, a required reserve ratio of 20%, and it holds $80,000 in reserves, what is the maximum deposit outflow it can sustain without altering its balance sheet? What options exist for a bank manager if they find that reserves do not meet the required amount set by the Fed? What options do you think are less and more costly compared to the others?
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