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August 1, 2014

Homework Help: Macroeconomics

Posted by Mel on Wednesday, October 13, 2010 at 1:08am.

A bank has issued 4 billion in transactions deposits and 2 billion in time deposits and other
nontransactions deposits. Its other liabilities and net worth equal 1 billion. The bank has 100 million in total reserves. The only reserve requirement that this and all other banks must satisfy is a 2 percent ratio that applies to transactions deposits.

A. What is the amount of the banks total assets?

B. What is the amount of the banks excess reserves?

C. What is the potential money multiplier for the banking system?

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