Assume that the following data describe the condition of the commercial banking system: L02 Total reserves: Transactions
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Assume that the following data describe the condition of the commercial banking system: L02 Total reserves: Transactions deposits: Cash held by public: Reserve requirement: $100 billion $800 billion $100 billion 0.125
(a) How large is the money supply (M1)?
(b) Are the banks fully utilizing their lending capacity? Explain.
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