Question
The initial condition of the banking system is as follows: $150 billion in reserve, $1,350 billion in loans and investments, and $1,500 billion in deposits.
The initial condition of the banking system is as follows: $150 billion in reserve, $1,350 billion in loans and investments, and $1,500 billion in deposits. The required reserve is 10%. The Fed buys $100 billion government securities using open market operation. What is the maximum amount of loans in the banking system as a result of such Fed operation?
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The Risk Modeling Evaluation Handbook Rethinking Financial Risk Management Methodologies In The Global Capital Markets
Authors: Greg Gregoriou, Christian Hoppe, Carsten Wehn
1st Edition
0071663703, 978-0071663700
