Assume the reserve requirement is 10 percent. First National Bank has vault cash and deposits with the Fed of $30 million, loans and securities of $60 million, and checking deposits of $300 million. First National is in a position to make

Question

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The reserve requirement is 10% of $300 million, which is $30 million. Since the bank already has $30 million in vault cash and deposits with the Fed, it cannot make additional loans without falling below the required reserves.

Assume the Reserve Requirement Is 10 Percent