<s>[INST] Banks can only hold a certain amount of deposits from the total deposits available to them (T). Let's say that the total number of deposits T is 100. The amount that banks hold is cca (cash and cash assets). If cca is 0.2, it means that banks hold 20% of total deposits (T). If banks can hold 0.2 or more of the total deposits T, the money multiplier is then: (T/cca). So if the banks are holding 0.2 (20%) of total deposits of $100, then money multiplier is $100/0.2, which is 500.
That's correct. Now, my question is, if the reserve requirements are increased, what would happen to the money multiplier in this scenario?[/INST]