What is the maximum loan that the bank a can make

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Reference no: EM13191601

Yesterday bank A had no excess reserves. Today it received a new deposit of $5000.

a) If the bank maintains a reserve requirement of 2 percent, what is the maximum loan that the bank A can make?

b) what is the maximum amount by which the money supply can be increased as a result of bank A's new loan?

Reference no: EM13191601

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