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Suppose that the T-accout for First National is as follows:
Assets Liabilities
Reserves $100,000 Deposits
Loans 400,000
a. If the Bank of Canada requires banks to hold 5 percent of deposits as reserves, how much in excess reserves does First National now hold?
b. Assume that all other banks hold only the required amount of reserves. If the First National decides to reduce its reserves to only the required amount, by how much the economy's money supply increase?
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Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..
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