Suppose the cash ratio is 5% and the desired reserve ratio changes from 5% to 10% with a constant monetary base banks are fully loaned out. Does the money supply in the economy increase or decrease? Why? Use the simple money multiplier to illustrate your answer.

Question

Quizplus · Accepted Answer

The Answer of Suppose the cash ratio is 5% and the desired reserve ratio changes from 5% to 10% with a constant monetary base banks are fully loaned out. Does the money supply in the economy increase or decrease? Why? Use the simple money multiplier to illustrate your answer.

Suppose the Cash Ratio Is 5% and the Desired Reserve