Given the following data, answer four questions about the money supply and the money multiplier. ValueTotal reserves:$ 32 billionTransactions deposits:$ 800 billionCash held by public:$ 300 billionBonds held by public:$ 450 billionStocks held by public:$ 215 billionGross domestic product:$ 8 trillionInterest rate:6 percentRequired reserve ratio:0.03Instructions: In parts a and b, enter your responses as a whole number. In parts c and d, round your responses to two decimal places.How large is the money supply (M1)?$ ____ billionHow much excess reserves are there?$ ____ billionWhat is the money multiplier?_____What is the available lending capacity of the banking system?$ billion

Since the government is the one that produces currency, whether it be in the form of paper money or…

Answered: Given the following data, answer four…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Given the following data, answer four questions about the money supply and the money multiplier.

	Value
Total reserves:	$ 32 billion
Transactions deposits:	$ 800 billion
Cash held by public:	$ 300 billion
Bonds held by public:	$ 450 billion
Stocks held by public:	$ 215 billion
Gross domestic product:	$ 8 trillion
Interest rate:	6 percent
Required reserve ratio:	0.03

Instructions: In parts a and b, enter your responses as a whole number. In parts c and d, round your responses to two decimal places.

How large is the money supply (M1)?
$ ____ billion
How much excess reserves are there?
$ ____ billion
What is the money multiplier?
_____
What is the available lending capacity of the banking system?
$ billion

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