What is the size of the money multiplier

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Problem - Assume that any money lent by a bank is deposited in checkable demand deposits in the banking system, that the required reserve ratio is 10%, and that banks do not hold excess reserves. Explain the effects of a $100 million open-market purchase of U.S. Treasury bills by the Fed on the value of checkable bank deposits. What is the size of the money multiplier?

Reference no: EM132939201

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