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What is the size of the money multiplier

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Reference no: EM13711850

The formula to enter into Excel to calculate the answers to these questions.  I have no Excel experience, so I need step by step instructions as well as the answer.

Assume a financial system has a monetary base of $25 million. The required reserves ratio is 10 percent and there are no leakages in the system.

a.   What is the size of the money multiplier?

b.   What will be the system's money supply?

 

Reference no: EM13711850

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