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Suppose that on average, Canadian banks keep 10% of deposits as reserves. You deposit $500 in a bank. How many dollars will the bank keep

Suppose that on average, Canadian banks keep 10% of deposits as reserves.

  1. You deposit $500 in a bank. How many dollars will the bank keep as reserves?
  2. How many dollars will this bank lend?
  3. What will be the money supply resulting from the $500 deposit?

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