Currency is deposited into a single bank

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Reference no: EM13981976

An economy starts with $10,000 in currency. All of this currency is deposited into a single bank. The required reserve ratio is 20 percent.

1. The bank’s required dollar reserves is

2. If all banks in the economy have the same reserve ratio as this bank, then the value of the economy’s money multiplier is

3. If all banks in the economy have the same reserve ratio as this bank, then the potential increase in the money supply by the system of banks would be

Reference no: EM13981976

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