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Please help me understand how to solve this question , can you please give a detailed answer on how this is solved, including the formula and how it is used here? THX
Using a required reserve ratio of 10% and assuming that banks keep no excess reserves, imagine that $200 is deposited into a checking account. What would happen to the money supply if the Fed increases the required reserve ratio to 20%?
Money supply can increase by $1,000.
This document contains various important questions and their appropriate answers in the subject field of Economics.
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