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2. Consider an economy where the ratio of required reserves to deposits is r = 0.05 , the ratio of currency holdings to deposits is
2. Consider an economy where the ratio of required reserves to deposits is r = 0.05, the ratio of currency holdings to deposits is c = 0.2, the ratio of bank excess reserves to deposits is e = 0.05 and the monetary base equals 100. Show how
to calculate the value of the M1 measure of the money supply.
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