Compute the effect would have on the money multiplier

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Reference no: EM132448982

Question 1: If households' currency-deposit ratio is 1.25, and they desire to maintain $9.25 in liquid savings assets for each dollar in their checking accounts, what must the banks' excess reserves ratio be if the money multiplier is 10? If the banks changed their excess reserves ratio to one dollar for every $1,000 of transaction deposits, compute the effect this would have on the money multiplier.

Reference no: EM132448982

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