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Business, 11.02.2020 21:52 maddigrace3

The only liability of the bank is deposits that households keep at the bank.The only two assets of the bank are the loans it makes out and the reserves it keeps.Banks are profit maximizers and keep only the required reserves (i. e. excess reserve = 0)When loans are made, households will redeposit this loan in their checking accounts and use checks.The reserve ratio is 20%.

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The only liability of the bank is deposits that households keep at the bank.The only two assets of...

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