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What would be the simple money multiplier

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Reference no: EM131963406

i) Assume that the reserve ratio in a country is 16%. What would be the simple money multiplier?

ii) Suppose that customers deposit $2,000 into their banks. Based on the simple money multiplier calculated in part i), calculate the total change in the money supply available in the banking system.

iii) Calculate the total change in the money supply available in the banking system if the reserve ratio increases to 20%. Explain how money multipliers work

Reference no: EM131963406

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