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Suppose a bank has to meet a reserve requirement of 10% and that the Fed pays an interest rate of 0.25% on reserves. Ignoring any
Suppose a bank has to meet a reserve requirement of 10% and that the Fed pays an interest rate of 0.25% on reserves. Ignoring any other costs associated with lending, how much does the reserve requirement reduce the amount the bank could earn on $1,000 in deposits if they can lend at 7%
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