Question: b . The initial money supply is $ 1 , 0 0 0 , of which $ 5 0 0 is currency held by the

b. The initial money supply is $1,000, of which $500 is currency held by the public. The desired reserve-deposit ratio is 0.2. Calculate the increase in the money supply associated with increases in bank reserves of $1, $5, and $10. What isthe money multiplier in this economy? Assume that individuals do not change their currency holdings.

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