Banking and Monetary Policy - End of Chapter Problem An economy has a monetary base of 1,000 $1 bills. Calculate the money supply in scenarios a - d. Then answer part e. a. All money is held as currency b. All money is held as demand deposits. Banks are required to hold 100% of deposits as reserves. c. All money is held as demand deposits. Banks hold 20% of deposits as reserves. Money supply $ Money supply = $ Money supply = $ d. People hold equal amounts of currency and demand deposits. Banks hold 20% of deposits as reserves. Round to the nearest dollar. Money supply = $ e. The central bank wants to increase the money supply by 10%. In each of the above scenarios, by how much must it increase the monetary base? Monetary base increase = $

Banking and Monetary Policy - End of Chapter Problem An economy has a monetary base of 1,000 $1 bills. Calculate the money supply in scenarios a - d. Then answer part e. a. All money is held as currency b. All money is held as demand deposits. Banks are required to hold 100% of deposits as reserves. c. All money is held as demand deposits. Banks hold 20% of deposits as reserves. Money supply $ Money supply = $ Money supply = $ d. People hold equal amounts of currency and demand deposits. Banks hold 20% of deposits as reserves. Round to the nearest dollar. Money supply = $ e. The central bank wants to increase the money supply by 10%. In each of the above scenarios, by how much must it increase the monetary base? Monetary base increase = $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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