Assume that total reserves are equal to $200 and total checkable bank deposits are equal
Chapter 0, Problem 3(choose chapter or problem)
Assume that total reserves are equal to $200 and total checkable bank deposits are equal to $1,000. Also assume that the public does not hold any currency and banks hold no excess reserves. Now suppose that the required reserve ratio falls from 20% to 10%. Trace out how this leads to an expansion in bank deposits.
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