Question

|| ||Value |Total bank reserves: | $34 billion |Total bank deposits: | $600 billion |Cash held by public: | $200 billion |Bonds held by p

Answer 1

As the public deposits money into thebank the Fed just needs to keep increasing the required reserve ratio so that the total reserves are equal to the required reserves. If the bankholds $200 billion then it can lend 200 - 160 billion = 40 billion.

Answer 2

the bank holds can lend 40 billions