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1. Given model of a process of money supply in an economy as cu + 1 M F+G+H(1-1)) Cu + where. cu = currency deposit
1. Given model of a process of money supply in an economy as cu + 1 M F+G+H(1-1)) Cu + where. cu = currency deposit ratio r = required reserve ratio F - net foreign assets G - net government borrowing H = net borrowing by commercial banks i = market interest rate id = central bank's discount rate Derive and comment the effect on money supply if the required reserve ratio is increased
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