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Retnec Retnec
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6 years ago
Let's assume that all banks in the system are "loaned up" (have no excess reserves) and that they all face a reserve requirement of 20 percent. If the Federal Reserve buys a $100,000 security from Bank A, how much new money can the banking system create? (Hint: Remember that the Fed will pay for the security by increasing the reserve account of Bank A.)
A) $100,000
B) $1,000,000
C) $400,000
D) $500,000
Textbook 
Introduction to Economic Reasoning

Introduction to Economic Reasoning


Edition: 8th
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hecosmetichecosmetic
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Retnec Author
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6 years ago
Thanksss
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