Which of the following examples would make banks most likely to give loans?
a. A bank receives $10 million from the Fed; interest rates are at 1 percent.
b. A bank receives $5 million from the Fed; interest rates are at 7 percent.
c. A bank receives $2 million from the Fed; interest rates are at 4 percent.
d. A bank receives $1 million from the Fed; interest rates are at 5 percent.
b. A bank receives $5 million from the Fed; interest rates are at 7 percent.
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Assume that when $100 of new reserves enter the banking system, the money supply ultimately increases by $625 . Assume also that no banks hold excess reserves and that the entire money supply consists of bank deposits. If, at a point in time, reserves for all banks amount to $500, then at that same point in time, loans for all banks amount to $2,625
a. True b. False Indicate whether the statement is true or false