Explain why the actual increase in m-1 will be smaller than, Ask an Expert

Economics

Assume that the banking system is subject to a legal reserve ratio of 10% and that a customer of bank A deposits $20,000 in her checking account a.use the concept of the over smplified " money multiplier" to calculate the total increase in depositis as well as the total increase in M-1. show the work

B. explain why the actual increase in M-1 will be smaller than that indicated by the over smplified multiplier.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9441567

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