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Compute reserve needs and money multiplier with the given information.

1. Assume people hold 10% of their deposits in the form of cash. Refind out the money multipliers in problem using the money multiplier when people hold cash.

a. 10%.

b. 25%

c. 75%

2. Assume the reserve requirement is 0.2. Banks lend all excess reserves, people hold no cash, and banks meet their reserve requirements. Complete the first five rounds of the money creation process also show the totals when the money creation process is complete.

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M922665

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