Answer to Question #82102 in Microeconomics for cosmas

Question

a) Consider a commercial bank of a country that has the following:
• reserves of 500 million
• loans of 3000 million
• customer deposits 3500 million
If the required reserve ratio is 10 %
i. Calculate:
ii. the amount that the bank is required to hold as reserves. (2 Marks)
iii. the bank’s excess reserves (2 Marks)
iv. By how much can the bank increase its loans? (3 Marks)

Answer 1

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