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Consider the model of financial markets where people hold money only in the form of checkable deposits, and do not hold any currency (i.e. all
Consider the model of financial markets where people hold money only in the form of checkable deposits, and do not hold any currency (i.e. all money is checkable deposits). Explain graphically (i.e. by drawing a graph) the effect of an increase in the reserve ratio from
toon the equilibrium interest rate in the market for central bank money.
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