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Assume the banking system contains the following amounts. Use this information to answer five questions.
total revenues $140 billion
transactions deposits. $700 billion
cash held by public. $300 billion
reserve requirement 0.2
Instructions: Enter your responses rounded to the nearest whole number.
a. Are the banks fully utilizing their lending capacity?
b. What would happen to the money supply initially if the public deposited $20 billion of cash in transactions accounts?
c. What would the lending capacity of the banking system be after this deposit?
$ billion
d. How large would the money supply be if the banks fully utilized their lending capacity?
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