Calculate the money multiplier and aggregate money supply

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Reference no: EM131940566

You are given the following information:

required reserve ratio       ............................................. 0.2

deposits(cheques)    ..................................................... 400 trillion

currency in circulation           ........................................ 600 trillion

excess reserves    ....................................................... 400 billion

Required:

a) calculate the aggregate money supply

b) calculate the money multiplier

c) briefly explain the meaning of the results in (b) above.

Reference no: EM131940566

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