RESERVE REQUIREMENTS
China Cuts Reserve Requirements
Beijing China's central bank reduced the amount of reserves
commercial banks are required to hold, freeing up money for
lending in the latest easing measure to shore up the world's
second-largest economy.
The People's Bank of China's percentage point cut in the reserve
requirement lowers the reserve-requirement ratio, or RRR, to 11.5
percent for large banks. The move frees up about US$79 billion in
additional funds that banks can now lend.
Source: News accounts of March 2020.
Instructions: Round your responses to one decimal place.
What was the money multiplier in China
a. before the change in reserve requirements?
b. after the change in reserve requirements?
