In the hypothetical country of Eastlandia, banks are required to hold 10% of checkable deposits as reserves, and the public holds none of the loans as currency in circulation and redeposits all of the loans. Complete the table (calculations should be to no more than two decimal places). Round Deposits Required Reserves of 10% Excess Reserves New Loans None of loan proceeds are held as currency in circulation by people Loan proceeds redeposited 1 $500           2             3             4             5             6             7             8             9             10             Totals               Calculate the new money supply. Calculate the money multiplier.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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In the hypothetical country of Eastlandia, banks are required to hold 10% of checkable deposits as reserves, and the public holds none of the loans as currency in circulation and redeposits all of the loans.

  1. Complete the table (calculations should be to no more than two decimal places).

Round

Deposits

Required Reserves of 10%

Excess Reserves

New Loans

None of loan proceeds are held as currency in circulation by people

Loan proceeds redeposited

1

$500

 

 

 

 

 

2

 

 

 

 

 

 

3

 

 

 

 

 

 

4

 

 

 

 

 

 

5

 

 

 

 

 

 

6

 

 

 

 

 

 

7

 

 

 

 

 

 

8

 

 

 

 

 

 

9

 

 

 

 

 

 

10

 

 

 

 

 

 

Totals

 

 

 

 

 

 

 

  1. Calculate the new money supply.
  2. Calculate the money multiplier.
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