Suppose that bank A , begins with the T- account shown below. The required reserve ratio is assumed to be 10 percent. Joe Doe , a holder of a deposit in bank A , with draws $ 1000 and deposits this amount in a commercial bank in a foreign country . Thus $ 1000 has been taken out of the Canadian banking system.A,what were bank A's required reserves? Did it have excess reserves initially?B, show the immediate effect of the with drawal from bank A.C, what is the status bank A's reserves now?D, Bank A reacts by calling in a loan that it had made to Mary Smith equal to the amount of its reserve deficiency. Mary repays the loan by writing a cheque on her account in bank B, another Canada bank . Bank B's initial T-account is shown beo. Fill in the T- accounts below for the effects of bank A's receiving the payment from Mary and of bank B's losing Mary's deposit.
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