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AP Macroeconomics/Unit 4: Financial Sector
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Realistic Money Multiplier Formula

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Which of the following expressions most accurately represents the money multiplier, accounting for required reserves, excess reserves, and currency held by the public?

A

1−rrrr\dfrac{1-rr}{rr}

B

1+crr+er+c\dfrac{1 + c}{rr + er + c}

C

1rr\dfrac{1}{rr}

D

1rr−er\dfrac{1}{rr-er}

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