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30 August, 02:19

Suppose you deposit $2,200 cash into your checking account. By how much will the total money supply increase as a result when the required reserve ratio is 0.4 0? The change in the money supply is: $ nothing (enter your result rounded to the nearest dollar ).

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  1. 30 August, 02:24
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    The money supply increases by $3300.

    Explanation:

    Money multiplier = 1/reserve ratio

    = 1/0.4

    = 2.5

    the change in the money supply = deposit * multiplier - deposit

    = $2,200*2.5 - $2,200

    = $3300

    Therefore, The money supply increases by $3300.
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