Fractional reserve banking

Reference no: EM1370829

The Federal Reserve buy $1 million in United State Treasury Bonds from a bond dealer, and the dealer's bank credits the dealer's account. The required reserve ratio is 15 percent, and the bank typically lends any excess reserves immediately. Assuming that no currency leakage occurs, how much will the bank be able to lend to its customers following the Fed's purchase?

Reference no: EM1370829

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