A. With the following values, calculate the money multiplier and the money supply: rr = .07 c = .30 ER = 0 Borrowed Reserves = 0 MB = $200 billion B. Calculate the level of currency (C), the level of deposits (D), the level of required reserves (RR), and the level of total reserves (R) in the banking system. C. If the bankers decide to hold a cushion of excess reserves equal to 9% of their checkable deposits. Calculate the new money multiplier, the new money supply, the level of deposits, currency in circulation, and the amount of excess reserves that banks will now hold.
A. With the following values, calculate the money multiplier and the money supply: rr = .07 c = .30 ER = 0 Borrowed Reserves = 0 MB = $200 billion B. Calculate the level of currency (C), the level of deposits (D), the level of required reserves (RR), and the level of total reserves (R) in the banking system. C. If the bankers decide to hold a cushion of excess reserves equal to 9% of their checkable deposits. Calculate the new money multiplier, the new money supply, the level of deposits, currency in circulation, and the amount of excess reserves that banks will now hold.
Chapter19: Money Creation
Section: Chapter Questions
Problem 4SQP
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A. With the following values, calculate the money multiplier and the money supply:
rr = .07
c = .30
ER = 0
Borrowed Reserves = 0
MB = $200 billion
B. Calculate the level of currency (C), the level of deposits (D), the level of
C. If the bankers decide to hold a cushion of
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