2. Calculate the money multiplier for the following values of the currency, excess reserves, and required reserve ratios (i.e., complete the following table), and explain why the money multiplier decreases when the currency or excess reserves ratio increases: Currency deposit ratio c 0.5 0.7 0.5 Excess reserves ratio e 0.01 0.01 0.9 0.08 0.08 0.08 Required reserve ratio r Money multiplier m
2. Calculate the money multiplier for the following values of the currency, excess reserves, and required reserve ratios (i.e., complete the following table), and explain why the money multiplier decreases when the currency or excess reserves ratio increases: Currency deposit ratio c 0.5 0.7 0.5 Excess reserves ratio e 0.01 0.01 0.9 0.08 0.08 0.08 Required reserve ratio r Money multiplier m
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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