The central bank of Malawi has issued $110,000 in Malawian dollars. What is the size of the
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Question:
The central bank of Malawi has issued $110,000 in Malawian dollars. What is the size of the money supply in each case below? a. If Malawians have deposited none of the currency in Malawi's banks, what is the size of the money supply? (4 marks) b. If Malawians have deposited all of the currency in Malawi's banks and the banks have a 100% target reserve ratio, what is the size of the money supply? (4 marks) c. If Malawians have deposited 60% of the currency in Malawi's banks and the banks have a 100% target reserve ratio, what is the size of the money supply?
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