Macmillan Learning The Monetary System-Work It Out: Question 1 In the nation of Orcam, people hold $4000 of currency and $20000 of demand deposits in the only bank, Orcbank. The reserve-deposit ratio is 0.3. Round answers to two places after the decimal when necessary. c. Assume Orcam's central bank wants to reduce the money supply by 10%. To reduce the money supply by 10%, Orcam's central bank should sell government bonds in open-market operations. Assuming no change in the money multiplier, calculate, how much Orcam's central bank needs to transact.

Macmillan Learning The Monetary System-Work It Out: Question 1 In the nation of Orcam, people hold $4000 of currency and $20000 of demand deposits in the only bank, Orcbank. The reserve-deposit ratio is 0.3. Round answers to two places after the decimal when necessary. c. Assume Orcam's central bank wants to reduce the money supply by 10%. To reduce the money supply by 10%, Orcam's central bank should sell government bonds in open-market operations. Assuming no change in the money multiplier, calculate, how much Orcam's central bank needs to transact.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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