宏观经济政策实践(1).pptVIP

* * Solution: 1. An increase in cr causes the money multiplier and therefore M itself to fall. An increase in cr raises both the numerator and denominator of the expression for m. But since rr 1, the denominator is smaller than the numerator, so a given increase in cr will increase the denominator proportionally more than the numerator, causing a decrease in m. If your students know calculus, they can use the quotient rule to find (dm/dcr) 0. 2. If households deposit less of their money, then banks can’t make as many loans, so the banking system won’t be able to “create” as much