Assume that the money multiplier m = (1+c)/(r+e+c). Where c is the currency

deposit ratio, e is the excess reserve ratio and r is the required reserve ratio.

a) With examples, explain what will cause an increase in the ratios c, e and r

b) Explain the implications of an increase in each of the ratios on the ability of the

central bank to increase money supply by increasing the monetary base.