Assume that the Bank of Ecoville has the following balance sheet and the Fed has a 10% reserve requirement in place: Balance Sheet for Ecoville International Bank ASSETS LIABILITIES Cash $33,000 Demand Deposits $99,000 Loans 66,000 Now assume that the Fed lowers the reserve requirement to 8%. If the money multiplier is 5, how much money will ultimately be created by this event?
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Assume that the Bank of Ecoville has the following balance sheet and the Fed has a 10% reserve requirement in place:
Balance Sheet for Ecoville International Bank |
|||
ASSETS |
LIABILITIES |
||
Cash |
$33,000 |
Demand Deposits |
$99,000 |
Loans |
66,000 |
|
|
Now assume that the Fed lowers the reserve requirement to 8%.
- If the money multiplier is 5, how much money will ultimately be created by this event?
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