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Suppose the Fed Requires Banks to Hold 9 Percent of Their

Question 168

Multiple Choice

Suppose the Fed requires banks to hold 9 percent of their deposits as reserves. A bank has $18,000 of excess reserves and then sells the Fed a Treasury bill for $9,000. How much does this bank now have available to lend out if it decides to hold only required reserves?


A) $27,000
B) $27,190
C) $26,190
D) $9,000

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