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Suppose in one country, its monetary base ( B ) is $200 billion. People hold one fourth (or 25%) of their money as currency (75%
Suppose in one country, its monetary base (B) is $200 billion. People hold one fourth (or 25%) of their money as currency (75% as deposits in banks). And commercial banks hold a half of their deposits as reserves (50% as reserves). What are reserve-deposit ratio (rr), currency-deposit ratio (cr), money multiplier (m), and total money supply (M)?
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