Suppose there is $120 million of cash and that half of this cash is held in bank vaults as required reserves (that is, banks hold no excess reserves). How large will the money supply be if the required reserve ratio is 10%? 12.5%? 16.2/3%?

The municipal swimming pool charges lower entrance fees to local residents than to non-residents. Assuming that this pricing strategy increases the profits of the pool, we can conclude that non-residents must have for swimming at the pool than residents.