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Course: AP??/College Macroeconomics?>?Unit 4
Lesson 4: Banking and the expansion of the money supply- Bank balance sheets in a fractional reserve system
- Money creation in a fractional reserve system
- Bank balance sheet free response question
- Lesson summary: banking and the expansion of the money supply
- Introduction to fractional reserve banking
- Required reserves, excess reserves, and bank behavior
- The money multiplier and the expansion of the money supply
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The money multiplier and the expansion of the money supply
Problem
Pancake Bank has in required reserves and in excess reserves. The bank is required to keep of all deposits in reserve.
If Chinhui deposits into Pancake Bank, how much in new loans can the bank make as a result of the deposit?