If the currency drain ratio in China is 10 percent of deposits and the desired reserve ratio
Question:
If the currency drain ratio in China is 10 percent of deposits and the desired reserve ratio equals the required reserve ratio, calculate the money multipliers in China and compare it with the U.S. money multiplier.
The People’s Bank of China lowered the required reserve ratio from 17.5 percent to 17 percent, noting that it remained much higher than in other countries.
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The money multiplier is 1C D R D CD where CD is the currency drain ratio and RD is t...View the full answer
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