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14-05-2023
Business

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Suppose commercial banks have no excess reserves. Then new deposits totaling $1 billion come into the banking system. The required reserve ratio is 20 percent.

What is the maximum amount by which banks can increase deposits in the entire banking system?

a. $5.0 billion

b. $2.5 billion

c. $0.5 billion

d. $2.0 billion

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