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The central bank of the fictitious country Omega raises bank reserves by $100. What effect will the increase in bank reserves have on the money supply in each of the following situations? describe in each case.

a. The banking system is a 100% reserve banking system.
b. The banking system is a fractional reserve banking system with a desired reserve deposit ratio of .25.
c. The banking system is a fractional reserve banking system with a desired reserve deposit ratio of .1.

Microeconomics, Economics

  • Category:- Microeconomics
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