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A new bank has vault cash of $1 million and $5 million in deposits held at its Federal Reserve District Bank.

1.A new bank has vault cash of $1 million and $5 million in deposits held at its Federal Reserve District Bank.

a.If the required reserves ratio is 8 percent, what dollar amount of deposits can the bank have?


b.If the bank holds $65 million in deposits and currently holds bank reserves such that excess reserves are zero, what required reserves ratio is implied?

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