of Tazi is controlled by the country's central bank known as the Bank of Tazi. The zian dollar. Aggregate banking statistics show that collectively the banks of Tazi hc eserves, $75 million of excess reserves, have issued $7,500 million of deposits, and easury bonds. Tazians prefer to use only demand deposits and so all money is on dep 29-1. Suppose that the Bank of Tazi changes the reserve requirement to 3 percent. Assa want to hold the same percentage of excess reserves what is the value of the money sup change in the reserve requirement? on ion

of Tazi is controlled by the country's central bank known as the Bank of Tazi. The zian dollar. Aggregate banking statistics show that collectively the banks of Tazi hc eserves, $75 million of excess reserves, have issued $7,500 million of deposits, and easury bonds. Tazians prefer to use only demand deposits and so all money is on dep 29-1. Suppose that the Bank of Tazi changes the reserve requirement to 3 percent. Assa want to hold the same percentage of excess reserves what is the value of the money sup change in the reserve requirement? on ion

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

Scenario 29-1
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit
of currency is the Tazian dollar. Aggregate banking statistics show that collectively the banks of Tazi hold $300
million of required reserves, $75 million of excess reserves, have issued $7,500 million of deposits, and hold $225
million of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the
bank.
Refer to Scenario 29-1. Suppose that the Bank of Tazi changes the reserve requirement to 3 percent. Assuming
that the banks still want to hold the same percentage of excess reserves what is the value of the money supply after
banks'adjust to the change in the reserve requirement?
O $9,375 million
O S12,500 million
O S7,500 million
O S10,000 million

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