Explain the phenomenon of money creation

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Reference no: EM131112205

1) Explain the phenomenon of money creation with fractional reserve banking using a numerical example with reserve ratio R=25%.

2) Examine some of the problems governments and central banks face in trying to control the money supply and present any exceptional policies they might use to deal with these problems.

3) If the ECB wanted to use three of its policy tools to decrease the money supply, what would it do?

Reference no: EM131112205

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