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Source B Information about Economy X's banking system Required reserve ratio Actual reserve ratio Monetary base ($ billion) Currency in public circulation ($ billion) 31 Dec 2018 20% 20% 80 50 31 Dec 2019 20% 25% 80 60 bilduq ert ba 000.1 1. Based on Source B, calculate the change in money supply from 31 December 2018 to 31 December 2019. gab sm 2. Referring to Source A and Source B, suggest TWO possible reasons to explain why the actual reserve ratio was higher than the required reserve ratio in 2019. 3. Refer to Source A and Source B and in light of your answer in Question 2, give TWO reasons to explain why money supply decreased in 2019 even though the monetary base remained unchanged.

Source B Information about Economy X's banking system Required reserve ratio Actual reserve ratio Monetary base ($ billion) Currency in public circulation ($ billion) 31 Dec 2018 20% 20% 80 50 31 Dec 2019 20% 25% 80 60 bilduq ert ba 000.1 1. Based on Source B, calculate the change in money supply from 31 December 2018 to 31 December 2019. gab sm 2. Referring to Source A and Source B, suggest TWO possible reasons to explain why the actual reserve ratio was higher than the required reserve ratio in 2019. 3. Refer to Source A and Source B and in light of your answer in Question 2, give TWO reasons to explain why money supply decreased in 2019 even though the monetary base remained unchanged.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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URGENT!!!! Please helppp thank you so muchh!!! ㅜㅜ

You have to refer to page one and answer only the Source B questions:)

Source B Information about Economy X's banking system Required reserve ratio Actual reserve ratio Monetary base ($ billion) Currency in public circulation ($ billion) 1. 31 Dec 2018 20% 20% 80 50 31 Dec 2019 20% 25% 80 60 bilduq afkoosd 1 002 Based on Source B, calculate the change in money supply from 31 December 2018 to 31 December 2019. brs 010 noi thuom qab smo 2. Referring to Source A and Source B, suggest TWO possible reasons to explain why the actual reserve ratio was higher than the required reserve ratio in 2019. 3. Refer to Source A and Source B and in light of your answer in Question 2, give TWO reasons to explain why money supply decreased in 2019 even though the monetary base remained unchanged.
Transcribed Image Text:Source B Information about Economy X's banking system Required reserve ratio Actual reserve ratio Monetary base ($ billion) Currency in public circulation ($ billion) 1. 31 Dec 2018 20% 20% 80 50 31 Dec 2019 20% 25% 80 60 bilduq afkoosd 1 002 Based on Source B, calculate the change in money supply from 31 December 2018 to 31 December 2019. brs 010 noi thuom qab smo 2. Referring to Source A and Source B, suggest TWO possible reasons to explain why the actual reserve ratio was higher than the required reserve ratio in 2019. 3. Refer to Source A and Source B and in light of your answer in Question 2, give TWO reasons to explain why money supply decreased in 2019 even though the monetary base remained unchanged.
Case analysis Economy X experienced a severe recession in 2019. Source A Thoughts of a banker, a businessperson and a depositor Banker Businessperson Depositor bank I would like to make sure that my has enough cash to meet increasing withdrawal demand. Frankly speaking, even if a bank lends us money, I may not want to borrow that much as the investment environment is so gloomy. It does not seem to be very safe to put money in banks. I'd rather store my money in a safe place at home.
Transcribed Image Text:Case analysis Economy X experienced a severe recession in 2019. Source A Thoughts of a banker, a businessperson and a depositor Banker Businessperson Depositor bank I would like to make sure that my has enough cash to meet increasing withdrawal demand. Frankly speaking, even if a bank lends us money, I may not want to borrow that much as the investment environment is so gloomy. It does not seem to be very safe to put money in banks. I'd rather store my money in a safe place at home.
Expert Solution
Step 1: Define money supply.

Money supply refers to the quantity of money that is in circulation in the economy.

The money supply is increased or decreased by the central bank. 

The central bank controls the interest rates and regulates the money supply in case of inflation or deflation.

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