If households’ currency-deposit ratio is 1.25

If households’ currency-deposit ratio is 1.25, and they desire to maintain $9.25
in liquid savings assets for each dollar in their checking accounts, what must
the banks’ excess reserves ratio be if the money multiplier is 10? If the banks
changed their excess reserves ratio to one dollar for every $1,000 of transaction
deposits, compute the effect this would have on the money multiplier.

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