Unformatted text preview: operation will equal (ATR x (1/rr)): ADD = ATR x (1/rr) where (1/rr) is the money multiplier. If the reserve requirement ratio is 10 %, then the value of this money multiplier is (1/.10) = 10. Therefore, a $1 increase in total bank reserves will have a $10 impact on demand deposits....
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- Spring '12
- Supply And Demand, demand deposits, money multiplier, total reserves, reserve requirement ratio, requirement ratio