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Given model of a process of money in an economy as M = (cu +1)/(cu +x)(F+G+X[i-i^d ]) where CU is the currency deposit ratio i.e
Given model of a process of money in an economy as M = (cu +1)/(cu +x)(F+G+X[i-i^d ]) where CU is the currency deposit ratio i.e cu=currency/deposit, x is the required reserve ratio i.e x=(require reserve)/deposit, F denotes net foreign assets, G, net government borrowing, H, net borrowing by commercial banks, i is the market interest rate, and i^d is the central banks discount rate. b) Derive the effects of the central banks policy instruments, in particular, if the required reserve ratio is increased, on the money supply.
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