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Part 1
Suppose Mrs. A deposits $10.939 in her bank, Bank A. Bank A then loans its new excess reserves to Mr. B. Mr. B deposits his loan in his bank, Bank B. Bank B then loans its new excess reserves to Ms. C. Ms. C then deposits her loan into Bank C. Assume that the reserve ratio for all banks is 10%.
a) How much does Bank A keep on reserve?
b) How much does Bank A loan to Mr. B?
c) How much does Bank B keep on reserve?