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If the required reserve ratio is 20 percent and commercial bankers decide to hold additional excess reserves equal to 5 percent of any newly acquired checkable deposits, then the effective monetary multiplier for the banking system will be:

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MissPhiladelphia
The effective monetary multiplier that will be used in the banking system given the data provided would be 4. A money multiplier is defined as the output of the reserve dollars the bank produces. To find the multiplier, just take into consideration the amount of deposit and the reserve ratio.

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