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1)Tilaknesia has a reserve ratio of 20% in its banking system. Calculate the simple money multiplie 2) On a given day customers deposit $3,300 into...


1)   Tilaknesia has a reserve ratio of 20% in its banking system. Calculate the simple money multiplie



2) On a given day customers deposit $3,300 into their banks. Based on the simple money multiplier calculated in part i), calculate the total amount that the money supply in the banking system will eventually increase to.  



3)Calculate the total amount that the money supply in the banking system will eventually increase to if the reserve ratio decreases to 16%. Assume the amount of fund initially deposited by customers remain at $3,300


4)Explain in detail how the money multiplier process works.  

Top Answer

(1) The simple money multiplier = 5. (2) The money supply will increase by $16 500 (will be added to the existing... View the full answer

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