Assume a financial system has a monetary base of 25 million


Assume a financial system has a monetary base of $25 million. The required reserves ratio is 10 percent, and there no leakages in the system.

a. What is the size of the money multiplier?
b. What will be the system's money supply?

 

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Finance Basics: Assume a financial system has a monetary base of 25 million
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