What is the size of the money multiplier

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As the executive of a bank or thrift institution you are faced with an intense seasonal demand for loans. Assuming that your loan-able funds are inadequate to take care of the demand, how might your Reserve Bank help you with this problem assume a financial system has a monetary base (MB) of $25 million. The required reserves ratio is 10 percent, and no leakages are in the system.

a. What is the size of the money multiplier (m)?

b. What will be the system's money supply?

Reference no: EM131245168

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