Explain how increasing the required reserve ratio impacts banks money creation process. Chinas central bank will raise
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China’s central bank will raise its reserve ratio requirement by a percentage point to a record 17.5 percent, stepping up a battle to contain lending growth. Banks’ ratio of excess reserves to deposits was 2 percent. Every half-point increase in the required reserve ratio cuts banks’ profits by 1.5 percent.
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Macroeconomics Canada in the Global Environment
ISBN: 978-0321778109
8th edition
Authors: Michael Parkin, Robin Bade
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