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Increases the required reserve ratio

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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.

Reference no: EM131715325

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