anonymous
  • anonymous
1. Deposits in all financial institutions equal $2 trillion. The total reserves held by these institutions are $240 billion, $100 billion of which is in excess of reserve requirements. a. What is the percentage reserve requirement? 7.0% b. What would the percentage reserve requirement have to be to maintain the existing amount of reserves ($240 billion) but eliminate excess reserves? 12 % c. What would happen to deposits at all financial institutions if the existing excess reserves were eliminated? Assume that elimination of excess reserves affects deposits only.
Finance
  • Stacey Warren - Expert brainly.com
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katieb
  • katieb
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anonymous
  • anonymous
c. Excess reserves of $100 billion will be loaned to create additional deposits: Max. change in money supply (deposits) = Excess Reserves / Reserve requirement = $100 billion / .07 = $1.43 billion

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