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QUESTION
1. a. What is the value of the money multiplier if Deposits are $1000, the Reserve Requirement is 5%, the public holds $500 in cash and the bank
1. a. What is the value of the money multiplier if Deposits are $1000, the Reserve Requirement is 5%, the public holds $500 in cash and the bank holds $70 as Reserves?
b. Why is the money multiplier not 20?
c. What does this imply about the ability of the FED to target monetary aggregates?
