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When the reserve ratio increases (for example from 0.10 to 0.12): desired reserves are changed into excess reserves the excess reserves of banks are increased
When the reserve ratio increases (for example from 0.10 to 0.12):
desired reserves are changed into excess reserves
the excess reserves of banks are increased
a single bank can no longer lend dollar-for-dollar with its excess reserves
excess reserves are turned into desired reserves
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