Qreferring back to the class example on money creation

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Q. Referring back to the class example on money creation, assuming that

(a) Initially, the central bank in Swede world puts 5,000,000 kronor into circulation and

(b) Commercial banks desire to hold reserves of 20 percent of deposits. Also, assume that the public holds no currency, so no currencies (reserves) are taken out from the bank. Show the balance sheets of Swede world only commercial bank after the initial deposits

(1), after one round of loans

(2), and after two rounds of loans

(3). what are the final values of bank reserves, loans, deposits, and the money supply?

Reference no: EM13352949

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