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1. RBF is requires to keep a reserve. The initial deposit is $5 000. Therefore the initial balan sheet of a particular bank looks like

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1. RBF is requires to keep a reserve. The initial deposit is $5 000. Therefore the initial balan sheet of a particular bank looks like this: Bank 1 -Initial Balance Sheet Liabilities Assets S Deposit 5000 Reserve 1000 Advance 4000 $5000 (i) Calculate the following: (a) Reserve ratio (b) Credit multiplier (c) Increase in demand deposit (d) Total increase in credit created (e) Increase in money supply

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