Suppose that: r = required reserve ratio = 0.10 c = {C/D} = currency ratio = 0.45 e = {ER/D} = excess reserve ratio = 0.05 MB = the monetary base = $5,000 billion 1 +c Given that the formula for the money multiplier is find the value for M, the money supply. r+ e +c The money supply is $ billion. (Round your response to the nearest whole number.) Use the money multiplier to find the new value for the money supply if open market operations increase the monetary base by $200 billion. The money supply is now $ billion. (Round your response to the nearest whole number.)
Suppose that: r = required reserve ratio = 0.10 c = {C/D} = currency ratio = 0.45 e = {ER/D} = excess reserve ratio = 0.05 MB = the monetary base = $5,000 billion 1 +c Given that the formula for the money multiplier is find the value for M, the money supply. r+ e +c The money supply is $ billion. (Round your response to the nearest whole number.) Use the money multiplier to find the new value for the money supply if open market operations increase the monetary base by $200 billion. The money supply is now $ billion. (Round your response to the nearest whole number.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![**Suppose that:**
- \( r = \) required reserve ratio = 0.10
- \( c = \left\{\frac{C}{D}\right\} \) = currency ratio = 0.45
- \( e = \left\{\frac{ER}{D}\right\} \) = excess reserve ratio = 0.05
- \( MB \) = the monetary base = $5,000 billion
Given that the formula for the money multiplier is
\[
\left(\frac{1+c}{r+e+c}\right)
\]
find the value for \( M \), the money supply.
**The money supply is $ \_\_\_ billion.** *(Round your response to the nearest whole number.)*
**Use the money multiplier to find the new value for the money supply if open market operations increase the monetary base by $200 billion.**
**The money supply is now $ \_\_\_ billion.** *(Round your response to the nearest whole number.)*](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3734eca5-1c61-4ba0-9228-f611059dd607%2F66e02e3e-edfd-4c8f-838a-39ee58ded6d7%2F82jodx_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Suppose that:**
- \( r = \) required reserve ratio = 0.10
- \( c = \left\{\frac{C}{D}\right\} \) = currency ratio = 0.45
- \( e = \left\{\frac{ER}{D}\right\} \) = excess reserve ratio = 0.05
- \( MB \) = the monetary base = $5,000 billion
Given that the formula for the money multiplier is
\[
\left(\frac{1+c}{r+e+c}\right)
\]
find the value for \( M \), the money supply.
**The money supply is $ \_\_\_ billion.** *(Round your response to the nearest whole number.)*
**Use the money multiplier to find the new value for the money supply if open market operations increase the monetary base by $200 billion.**
**The money supply is now $ \_\_\_ billion.** *(Round your response to the nearest whole number.)*
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