Calculate the money multiplier for the following values of the currency, excess reserves, and required reserves ratios
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Calculate the money multiplier for the following values of the currency, excess reserves, and required reserves ratios (i.e., complete the following table), and explain why the money multiplier decreases when the currency or excess reserves ratio increases:
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Currency deposit ratio 0.5 Excess reserves ratio 0.01 Required reserves ratio 0.08 Money multiplier 0.7 0.5 0.01 0.9 0.08 0.08
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The money multiplier is a measure of the maximum amount of new demand deposit mone...View the full answer
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