The following is information about a banking system (all figures are in $millions): Target reserve ratio New cash deposits into the whole 10 percent $20 system Excess reserves before the above 0 deposits Refer to the above information to answer this question. What will the $20 of new deposits into chequing accounts initially create? a. $18 of excess reserves. b. $100 of new demand deposits. c. $18 of new demand deposits. Od. Excess reserves of $20.

The following is information about a banking system (all figures are in $millions): Target reserve ratio New cash deposits into the whole 10 percent $20 system Excess reserves before the above 0 deposits Refer to the above information to answer this question. What will the $20 of new deposits into chequing accounts initially create? a. $18 of excess reserves. b. $100 of new demand deposits. c. $18 of new demand deposits. Od. Excess reserves of $20.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 2.3P

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