Suppose the owners of the bank borrow $100 to supplement their existing reserves. this would increase the reserves account andincrease the account.

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Business

Ferrell

26 July, 10:26

Suppose the owners of the bank borrow $100 to supplement their existing reserves. this would increase the reserves account andincrease the account.

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Clara Ferrell · Answer 1

There will be loss due to the interest of the amount borrowed just to compensate or supplement their existing reserves.

Total money borrowed is $100 + ($100*%interest)

This strategy of the owner is not good and may result to more money loss than gaining more profit.