What is the required reserve ratio

Reference no: EM132200124

Question: If the monetary multiplier is 4, what is the required reserve ratio? Describe how and identify by what amount the Third National Bank can create money in the economy.

Recall that, generally, bank creates money in a typical economy by making loans. The Fed sets the reserve requirement (the required reserve ratio) that directly affects the amount of money creation.

Reference no: EM132200124

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