Business, 05.05.2020 17:39, dumbdumbkylee

The reserve ratio is 20 percent. The Fed buys $1 million in government securities from a bond dealer by transmitting the funds to the dealer's deposit account at Bank A. Bank A loans the maximum amount possible to a construction company, which buys materials from a lumber yard. The lumberyard deposits the construction company's check in Bank B. What is the maximum loan Bank A can now make and the maximum loan Bank B can now make

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The reserve ratio is 20 percent. The Fed buys $1 million in government securities from a bond dealer...