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2) Let's assume that the desired holdings of currency C , excess reserves ER, and savings 5' grow proportionally with checkable deposits D, which implies

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2) Let's assume that the desired holdings of currency C , excess reserves ER, and savings 5' grow proportionally with checkable deposits D, which implies that the ratios Are constant. Let \"r?" denote the required reserve ratio. Let's adopt M2 = C + D + 3 as our denition of money supply. Then, derive money multiplier dened by %, where MB- is monetary base, in terms of c, e, S,T?". (20 points)

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