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P6: Assume a financial system has a monetary base of $25 million. The required reserves
ratio is 10 percent, and there are no leakages in the system.
What is the size of the money multiplier? 1/.10% = 10%
What will be the systemÃ¢â‚¬â„¢s money supply? $25 million x 10= $250 million
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