Assume the following for a given economy:
Demand Deposits (DD) = $890 b.
Excess Reserves in the banking system = none ($0 b.)
Required reserve ratio = 9%
Assume also that:
1. The public holds $0.15 in cash for every $1 it holds in demand deposits [DD].
2. Banks lend out 80% of any additional excess reserves they receive (w = 0.20). Determine the deposit multiplier (DM) for the banking system.
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Answer:
23400000000000000
Explanation:
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