reserves they hold. Suppose that there are two types of consumers; call them type- a consumers and type- b consumers. Type- a consumers hold ca dollars in cash for every dollar they hold in deposits; type- b consumers hold cb dollars in cash for every dollar they hold in deposits. Let Ca denote the total amount of cash held by type- a consumers, and let Cb denote the total amount of cash held by type- b consumers. Let Da denote the total amount of deposits held by type- a consumers, and let Db denote the total amount of deposits held by type- b consumers. Let D to denote the total amount of deposits in the economy; let C denote the total amount of cash in the economy; let R denote the total amount of reserves in the economy; let ER denote the total amount of excess reserves in the economy; let RR denote the required reserves, let MB denote the monetary base. It remains true that the definitions of the money supply, the monetary base, and total reserves are: M=C+D,MB=C+R,R=RR+ER Let rr denote the required reserve for each dollar deposity and e denote the excess reserve ratio for each dollar deposit. Notice that the following identities also apply: C=Ca+CbD=Da+Db. Let be the fraction of all deposits held by type- a consumers. The money multiplier is still defined as mM/MB. a) Provide an expression for C/D in terms of ca,cb, and . b) Using the definition of m,M and MB, find the money multiplier in terms of ,rr,e,ca and cb. c) Suppose that ca>cb and rr+ecb and rr+e