Given the following information Reserve requirement for demand deposits = 12% Cash in circulation = RM 210 millions Demand Deposits = RM 574 millions Money Market Deposits = RM287 millions Reserves loaned from Central Bank = RM 15 millions Non-loan reserves in Central Bank = RM94 millions Excess Reserves = RM 0.96 millions Assume that the money market deposit is not subject to reserve requirements. i) Calculate the value of money multiplier for M1 and M2 ii) If you wish that the Central Bank will expand its monetary base (M1) so money supply (M1) would grow by 3% over the next one year, how much should the monetary base change in order to realize the changes?
Given the following information Reserve requirement for demand deposits = 12% Cash in circulation = RM 210 millions Demand Deposits = RM 574 millions Money Market Deposits = RM287 millions Reserves loaned from Central Bank = RM 15 millions Non-loan reserves in Central Bank = RM94 millions Excess Reserves = RM 0.96 millions Assume that the money market deposit is not subject to reserve requirements. i) Calculate the value of money multiplier for M1 and M2 ii) If you wish that the Central Bank will expand its monetary base (M1) so money supply (M1) would grow by 3% over the next one year, how much should the monetary base change in order to realize the changes?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Given the following information
Reserve requirement for demand deposits = 12%
Cash in circulation = RM 210 millions
Demand Deposits = RM 574 millions
Reserves loaned from Central Bank = RM 15 millions
Non-loan reserves in Central Bank = RM94 millions
Assume that the money market deposit is not subject to reserve requirements.
i) Calculate the value of money multiplier for M1 and M2
ii) If you wish that the Central Bank will expand its monetary base (M1) so money supply (M1) would grow by 3% over the next one year, how much should the monetary base change in order to realize the changes?
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