If households’ currency-deposit ratio is 1.25, and they desire to maintain $9.25 in liquid savings assets for each dollar in their checking account, what must the banks’ excess reserves ratio be if the money multiplier is 10? If the banks changed their excess reserves ratio to one dollar for every $1000 of transaction deposits, compute the effect this would have on the money multiplier. (You may have to assume the requirement reserve ratio in this problem).

Answer rating: 100% (QA)

We have x 925x 00125 x 00125925 00125x 09875x 0115625 x 0117088 If ... View the full answer