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When the required reserve ratio

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What will happen to the money supply under the following circumstances in the banking system?

a. When the required reserve ratio is 25% and a depositor withdraws $700 from his checkable bank deposit, the money supply will potentially (increase, decrease) ________ by $ ________.

b. When the required reserve ratio is 5% and a depositor adds $700 to his checkable bank deposit, the money supply will potentially (increase, decrease) ________ by $ ________.

Reference no: EM131597836

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