Money Multiplier: =Drr = required reserve ratio = 0.10C = currency in circulation = $ 400 billion= checkable deposits= $800 billion1 + cER= excess reserverr + e + c-$0.80 billionM = money supply (M1) = C + D = $1,200c = currency ratio = C/D = $400/$800= 0.5e excess reserve ratio = ER/D = $.80 b / $800 bUsing the formula for the money multiplier above, derive is the MoneyMultiplier?

Here Money multiplier formula is given Money multiplier = 1+c / rr + e + c

Money Multiplier: 1 + c rr + e + c required reserve ratio = 0.10 C = currency in circulation = $ 400 billion D = checkable deposits = $800 billion ER = excess reserve - $0.80 billion Mmoney supply (M1) = C + D = : C + D = $1,200 c = currency ratio = C/D = $400/$800= 0.5 e = excess reserve ratio = ER/D = $.80 b / $800 b Ising the formula for the money multiplier above derive is the Mo

Money Multiplier: 1 + c rr + e + c required reserve ratio = 0.10 C = currency in circulation = $ 400 billion D = checkable deposits = $800 billion ER = excess reserve - $0.80 billion Mmoney supply (M1) = C + D = : C + D = $1,200 c = currency ratio = C/D = $400/$800= 0.5 e = excess reserve ratio = ER/D = $.80 b / $800 b Ising the formula for the money multiplier above derive is the Mo

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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