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A bank currently has $45 million in deposits, $9 million in cash in the vault, $16 million on deposit with the Fed, and $4 million in government securities. The reserve ratio is 0.12 (as a decimal). A new deposit is made of $3 million. What is the maximum size loan the bank can make once the check clears?

A bank currently has $45 million in deposits, $9 million in cash in the vault, $16 million on deposit with the Fed, and $4 million in government securities. The reserve ratio is 0.12 (as a decimal). A new deposit is made of $3 million. What is the maximum size loan the bank can make once the check clears?

Macroeconomics
Macroeconomics
13th Edition
ISBN:9781337617390
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter12: Money, Banking And The Financial System
Section: Chapter Questions
Problem 12QP
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A bank currently has $45 million in deposits, $9 million in cash in the vault, $16 million on deposit with the Fed, and $4 million in government securities. The reserve ratio is 0.12 (as a decimal). A new deposit is made of $3 million. What is the maximum size loan the bank can make once the check clears?
Transcribed Image Text:A bank currently has $45 million in deposits, $9 million in cash in the vault, $16 million on deposit with the Fed, and $4 million in government securities. The reserve ratio is 0.12 (as a decimal). A new deposit is made of $3 million. What is the maximum size loan the bank can make once the check clears?
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