The money base in an economy is 200bn. The public holds a quarter of it in cash, and the reserve ratio is 20%. If the public reduces the quantity of cash held by 10bn then the supply of liquid assets will increase by

The money base in an economy is 200bn. The public holds a quarter of it in cash, and the reserve ratio is 20%. If the public reduces the quantity of cash held by 10bn then the supply of liquid assets will increase by

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter12: Money, Banking And The Financial System

Section: Chapter Questions

Problem 8WNG

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Question

The money base in an economy is 200bn. The public
holds a quarter of it in cash, and the reserve ratio is
20%. If the public reduces the quantity of cash held by
10bn then the supply of liquid assets will increase by

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