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(Canada) Q3. Suppose a crisis in financial markets, like the collapse of public willingness to hold large denomination term deposits in 2007 and 2008,
(Canada) Q3. Suppose a crisis in financial markets, like the collapse of public willingness to hold large denomination term deposits in 2007 and 2008, increases the risk banks attach to lending and the non-bank public attaches to all bank deposits. What are the implications for the desired reserve ratio, the money supply multiplier, and the money supply?
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