An economy has $250'000,000 of cash in circulation, with the monetary base (or high expansionary money) having a value of $320'000,000. (or high expansionary money) having a value of $320'000,000. Demand deposits have a value of $180'000'000. deposits have a value of $180'000,000. a. How much money is in bank reserves? Assuming that banks are not are not keeping additional reserves, only the mandatory reserves, what is the percentage of bank reserves? the bank reserve requirement? b. Calculate and interpret the value of the money multiplier. c. If the central bank projects that $280'000,000 is needed to circulate $280'000,000 in the economy as means of payment, without changing the monetary base or high money. as means of payment, without modifying the
An economy has $250'000,000 of cash in circulation, with the monetary base (or high expansionary money) having a value of $320'000,000. (or high expansionary money) having a value of $320'000,000. Demand deposits have a value of $180'000'000. deposits have a value of $180'000,000. a. How much money is in bank reserves? Assuming that banks are not are not keeping additional reserves, only the mandatory reserves, what is the percentage of bank reserves? the bank reserve requirement? b. Calculate and interpret the value of the money multiplier. c. If the central bank projects that $280'000,000 is needed to circulate $280'000,000 in the economy as means of payment, without changing the monetary base or high money. as means of payment, without modifying the
Chapter1: Making Economics Decisions
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Transcribed Image Text:An economy has $250'000,000 of cash in
circulation, with the monetary base (or high
expansionary money) having a value of
$320'000,000.
(or high expansionary money) having a value of
$320'000,000. Demand deposits have a value of
$180'000'000.
deposits have a value of $180'000,000.
a. How much money is in bank reserves?
Assuming that banks are not
are not keeping additional reserves, only the
mandatory reserves, what is the percentage of
bank reserves?
the bank reserve requirement?
b. Calculate and interpret the value of the
money multiplier.
c. If the central bank projects that $280'000,000
is needed to circulate $280'000,000 in the
economy as means of payment, without
changing the monetary base or high money.
as means of payment, without modifying the
monetary base or high-powered money, what
should be the value of the reserve requirement?
what should be the value of the reserve
requirement?
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