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Macroeconomics 19th Edition by Campbell McConnell , Stanley Brue,Sean Flynn
Edition 19ISBN: 978-0077337728Macroeconomics 19th Edition by Campbell McConnell , Stanley Brue,Sean Flynn
Edition 19ISBN: 978-0077337728 Exercise 6
Suppose the simplified consolidated balance sheet shown below is for the entire commercial banking system and that all figures are in billions of dollars. The reserve ratio iS25 percent. 
a. What is the amount of excess reserves in this commercial banking system? What is the maximum amount the banking system might lend? Show in columnS1 and 1? how the consolidated balance sheet would look after this amount has been lent. What is the size of the monetary multiplier?
b. Answer the questions in part a assuming the reserve ratio iS20 percent. What is the resulting difference in the amount that the commercial banking system can lend?
a. What is the amount of excess reserves in this commercial banking system? What is the maximum amount the banking system might lend? Show in columnS1 and 1? how the consolidated balance sheet would look after this amount has been lent. What is the size of the monetary multiplier?
b. Answer the questions in part a assuming the reserve ratio iS20 percent. What is the resulting difference in the amount that the commercial banking system can lend?
Explanation
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a. The balance sheet is reproduced below...
Macroeconomics 19th Edition by Campbell McConnell , Stanley Brue,Sean Flynn
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