uppose that the T-account for Nan Bank Inc. is as follows:
Assets Liabilities
Reserves $100,000
Loans $400,000 Deposits $500,000
If the Bank of Canada requires banks to hold 5 percent of deposits as reserves, how much in excess reserves does Nan Bank Inc. now hold?
Assume that all other banks hold only the required amount of reserves. If Nan Bank Inc. decides to reduce its reserves to only the required amount, by how much would the economy's money supply increase?