Answer to Question #66089 in Macroeconomics for Rubal

Question

consider an individual who moves to canada and bring with him $40,000 in canadian currency,which he deposits in a canadian bank.for each of the cases below,work out the first three steps of the money multiplier process after the individual deposited $40,000 into a canadian bank,and then use the money creation equation to compute the overall change in deposits and reserves in the canadian banking system as a result of this new deposits of $40,000.a)10% target reserve ratio; no cash drain;no excess reserve.b) 10% target reserve ratio;5%cash drain;no excess reserves.