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10. Problems and Applications Q10 Assume that the banking system has total reserves of $180 billion....

10. Problems and Applications Q10

Assume that the banking system has total reserves of $180 billion. Assume also that required reserves are 20 percent of checking deposits and that banks hold no excess reserves and households hold no currency.

The money multiplier is ____

The money supply is____$ billion.

Suppose the Fed raises required reserves to 25
percent of deposits.

The new money multiplier is____ , and the money supply ( increases/ decreases) to____ $billion.
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