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QUESTION

7. If the reserve requirement (rr) is 0.2, the currency deposit ratio, C, is 0.05 and the excess reserve ratio (e) is 0.15, what is the money

7. If the reserve requirement (rr) is 0.2, the currency deposit ratio, C, is 0.05 and the excess reserve ratio (e) is 0.15, what is the money multiplier? Explain why the money multiplier differs from the simple deposit multiplier in this example.

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