Question: The commercial banks in Econoland have Reserves $1,000 million Loans $7,000 million Deposits $8,000 million Total assets $10,000 million The banks hold no excess reserves.
a. Calculate the banks' reserve ratio.
b. Sandee, an immigrant, arrives in Econoland with $5 million, which she deposits in a bank. How much does Sandee's bank lend initially?
c. How much money will the banking system generate from Sandee's deposit?