Determining the size of the money multiplier
Assume that banks become more conservative in their lending policies, and start holding some excess reserves. Compare this to a situation in which banks are not holding excess reserves. In the new situation, the size of the money multiplier will be
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Assume that banks become more conservative in their lending policies, and start holding some excess reserves. Compare this to a situation in which banks are not holding excess reserves. In the new situation, the size of the money multiplier will
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