The current required reserve ratio in China is 15%, and the PBC removed the requirement of loan-to- deposit ratio no more than 75% in Oct 2015.

1. Compute the upper limit of the money multiplier in China before and after 2015 October.
2. The current money multiplier in China is around 5. What are the possible reasons that explain the difference between the actual money multiplier and the upper limit you obtained in part a)?

before 2015: 1/1-0.75

after 2015: 1/1-0.85