The commercial banks in Fundland have Reserves $500 million
Loans $3,500 million
Deposits $4,000 million
Total assets $5,000 million The banks hold no excess reserves.
a) Calculate the banks' desired reserve ratio.
b) An immigrant arrives in Fundland with $10 million, which she deposits in a bank. How much does the imm bank lend initially?

Question

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The Answer of The commercial banks in Fundland have Reserves $500 million
Loans $3,500 million
Deposits $4,000 million
Total assets $5,000 million The banks hold no excess reserves.
a) Calculate the banks' desired reserve ratio.
b) An immigrant arrives in Fundland with $10 million, which she deposits in a bank. How much does the imm bank lend initially?

The Commercial Banks in Fundland Have Reserves $500 Million