Money supply be banks fully utilized their lending capacity

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Reference no: EM13800480

Assume the Banking system contains the following amounts:

Total reserves- $80 billion

Transactions deposits- $800

Cash held by public- $100 billion

Reserve requirement- 0.10

What would the lading capacity of the banking system be after such a portfolio switch?

How large would the money supply be if the banks fully utilized their lending capacity?

Reference no: EM13800480

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