Practice with money multipliers. Think of the money supply (MS) as equal to either M1 or M2.
Question:
a. RR = 5%, Change in reserves = $10 billion. MM = ?; Change in MS = ?
b. RR = ?, Change in reserves = 2$1,000. MM = 5; Change in MS = ?
c. RR = 100%, Change in reserves = $10 billion. MM = ?; Change in MS = ?
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