Compute the impact on the money multiplier of currency-to-deposit ratio from an increase in the requirement 9 percent to 14 percent when the reserve is 10 percent of deposits, and banks' desired excess reserves are 3 percent of deposits.

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter25: Money, Banking, And The Federal Reserve System
Section: Chapter Questions
Problem 13P
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Compute the impact on the money multiplier of
an increase in the currency-to-deposit ratio from
9 percent to 14 percent when the reserve
requirement is 10 percent of deposits, and
banks' desired excess reserves are 3 percent of
deposits.
Instructions: Enter your responses rounded to
two decimal places.
When desired currency holdings = 9% of
deposits, m =
When desired currency holdings = 14% of
deposits, m =
Transcribed Image Text:Compute the impact on the money multiplier of an increase in the currency-to-deposit ratio from 9 percent to 14 percent when the reserve requirement is 10 percent of deposits, and banks' desired excess reserves are 3 percent of deposits. Instructions: Enter your responses rounded to two decimal places. When desired currency holdings = 9% of deposits, m = When desired currency holdings = 14% of deposits, m =
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