Suppose the ratio of deposits that banks hold in the form of reserves is 7 percent. Suppose further that people want to hold 8 percent of their deposits in the form of cash. Then, if the Fed wants the money supply to be $6, 228 billion, what is the necessary level of high-powered money?

Suppose the ratio of deposits that banks hold in the form of reserves is 7 percent. Suppose further that people want to hold 8 percent of their deposits in the form of cash. Then, if the Fed wants the money supply to be $6, 228 billion, what is the necessary level of high-powered money?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose the ratio of deposits that banks hold in the form of reserves is 7 percent. Suppose further that
people want to hold 8 percent of their deposits in the form of cash. Then, if the Fed wants the money supply
to be $6,228 billion, what is the necessary level of high-powered money?

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