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Assets
Liabilities
Reserves $100,000
Deposits $500,000
Loans $400,000
(i) If the Bank of Canada requires banks to hold 5 percent of deposits as reserves, how much in excess reserves does Nan Bank Inc. now hold?
(ii) Assume that all other banks hold only the required amount of reserves. If Nan Bank Inc. decides to reduce its reserves to only the required amount, by how much would the economy's money supply increase?
2. The economy of Kyleland contains 2000 $1 bills.
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