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Assume that Linda deposits in her checking account the $1,000 cash she was keeping at home for an emergency. If the required reserve ratio is 0.20, what is the maximum change in the money supply from her deposit?

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kaympoey08

Answer:

The answer is $5000

Explanation:

total change in MS  =change in MB×MM

Money multiplier = 1/0.2= 5

Therefore total change = 1000* 5= $5000

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