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a) Give the formula for the simple deposit multiplier. If the reserve ratio is 20 per cent, what is the maximum increase in demand account

a) Give the formula for the simple deposit multiplier. If the reserve ratio is 20 per cent, what is the maximum increase in demand account deposits that will result from an increase in bank reserves of $20 000? (3 marks)

b) How does the RBA control liquidity in the overnight money market? (2 marks)

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