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In the country of Greenlandia the public holds $10 billion in currency but most transactions are electronic. Bank reserves equal $50 billion. The central bank
- In the country of Greenlandia the public holds $10 billion in currency but most transactions are electronic. Bank reserves equal $50 billion. The central bank is increasing the reserve requirement from 10 to 15 percent and they want to avoid any chance in the money supply. By how much must the central bank increase bank reserves to keep the money supply the same? In practice, how can the central bank increase the amount of bank reserves?
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