Size of the money multiplier
Assume the financial system has a monetary base of $25 million. The required reserves ratio is 10 percent, and there are 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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Assume the financial system has a monetary base of $25 million. The required reserves ratio is 10 percent, and there are no leakages in the system. What is the size of the money multiplier?
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