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First Credit Union

Assets Liabilities
Required Reserves - $2500 Demand Deposits - $50000
Excess Reserves - $27151 Owner's Equity - $4464
Loans - $16372 Debt - $4205
Bonds - $12646

1) What is the required reserve ratio?

2) What is the money multiplier?

3) If First Credit Union loans out the rest of its available money, what is the maximum possible increase in the money supply?

4) If the Fed buys $100 worth of bonds, what is the immediate increase in the money supply?

5) Given the Fed's action in (4) only, what is the maximum change in loans that banks can offer in the entire system?


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