1. Suppose the T-Account for RBCTD National Bank of Canada is as follows: Assets Liabilities Reserves $100,000 Deposits $500,000 Loans $400,000 a. If the Bank of Canada requires banks to hold 5% of deposits as reserves, how much in excess reserves does RBCTD now hold? b. Assume all other banks hold only the required reserves. If RBCTD decides to reduce its reserves to only the required amount, by how much will the economy’s money supply increase?
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