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Unformatted text preview: assumes that people / firms do not hold on to money and only make deposits (i.e. cr = 0) Money multiplier is always greater than 1 because the reserve ratio is always smaller than 1 R / d is always less than 1- if rr goes down (if the fed asks banks to keep 8% instead of 10% of reserves), then money supply will increase- when cr increases, then M goes down (we can only get this by taking the derivative, so instead just know this as a principle)...
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This note was uploaded on 01/14/2012 for the course ECON 002 taught by Professor Eudey during the Fall '08 term at UPenn.
- Fall '08