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Suppose that the central bank has increased the money supply such that there is an additional $ 689645 in excess reserves. If the reserve ratio is 9.0 percent, what is the maximum increase in money supply? Round your answer to the nearest dollar.

Respuesta :

Answer:

[tex]increase\ in\ money\ supply=\frac{1}{0.09}\times 689645=$7662722.22[/tex]

Explanation:

We have given required reserve ratio = 9 %

Excess reserve = $ 689645

We have to calculate increase in money supply

Increase in money supply is given by

[tex]increase\ in\ money\ supply=\frac{1}{required\ reserve\ ratio}\times excess\ reserve[/tex]

So [tex]increase\ in\ money\ supply=\frac{1}{0.09}\times 689645=$7662722.22[/tex]

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