(Answered) The total money supply m has two components bank deposits d

Management Studies

The total money supply M has two components: bank deposits D and cash holdings C, which we assume to bear a constant ration CD=c, 0

a) Express the money supply M as a function of high- powered money H.

b) Would an increase in the reserve ratio or lower the money supply?

c) How would an increase in the cash-deposit ratio c affect the money supply?

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