The Federal Reserve wants to increase the money supply by printing and distributing 1 million dollars worth of currency notes. What will be the actual increase in money supply if the public holds one fourth of the currency as cash, and deposits rest of the money in banks that hold 5 percent of their deposits as reserves?

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The Answer of The Federal Reserve wants to increase the money supply by printing and distributing 1 million dollars worth of currency notes. What will be the actual increase in money supply if the public holds one fourth of the currency as cash, and deposits rest of the money in banks that hold 5 percent of their deposits as reserves?

The Federal Reserve Wants to Increase the Money Supply by Printing