Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Chapter 13, Problem 14CQ
To determine
Explain the actual money deposit multiplier, which is generally less than the potential multiplier.
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Define the term money multiplier?
What are the two assumptions used to calculate
the money multiplier?
1 a) Calculate the money multiplier.
b) Calculate the bank deposit multiplier.
Chapter 13 Solutions
Economics: Private and Public Choice
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Similar questions
- What is money multipliers in simple terms?arrow_forwardThe people in an economy have $10 million in money. There is only one bank that all the people deposit their money in and it holds 20% of the deposits as reserves. What is the money multiplier in this economy?arrow_forwardwhat is the difference in the spending multiplier from our "circular flow" with the money multiplier involved with our banking system?arrow_forward
- Whys is the actual Money Multiplier less than the potential Money Multiplier?arrow_forwardIn the It's a Wonderful Life Bank Run, for instance, this demonstrates the following economic concepts: Fractional Reserves • Money multiplier Transaction and asset demand for money 4 For your Initial Post: I would like for you to go to YouTube, find a clip from a music video, movie, or TV show that has to do with "Money". I like videos to show or emphasize a point. Put that clip in your post in this Discussion. Identify and explain two economic concepts that you've learned from this section on Money, Banking, and Monetary Policy that are evident or being shown in that clip. Write at least two sentences for each economic concept you've identified explaining its relevance in that clip. Please remember Netiquette and post clips that are appropriate (e.g. no profanity or vulgar language). Please see these instructions on How to link a YouTube video in a discussion reply in Canvas. Barrow_forwardto calculate the money multiplier at each of the following values for the reserve requirement. 3. RR = 0 (no reserve is necessary) RR = 0arrow_forward
- Which of the monetary policy tools can alter both the level of excess reserves and the money multiplier?arrow_forward“The money multiplier is necessarily greater than 1.”Is this statement true, false, or uncertain? Explain youranswer.arrow_forwardHow does improved financial inclusion in an economy affect the money multiplier for theeconomy?arrow_forward
- When currency is equal to $100 billion and reserves are equal to $200 billion, and we know that the money multiplier is equal to 2.5, then the money supply will be equal toarrow_forwardIn an hypothetical Economy, the value of legal reserve ratio is 41% What would be the money multiplierarrow_forwardCurrency in Circulation (October 2020) 40.5 billion Nigerian currency Reserves (October 2020) 34.2 billion Nigeriancurrency M1 (October 2020) 2,465.9 billion Nigeriancurrency M2 (October 2020) 2,638.8 billion Nigeriancurrency Calculate the size of the actual money (M2) multiplier in October 2020. Round your answer to one decimal place. Nigeria's central bank, N. Bank, has not set a required reserve ratio (you can treat the required reserve ratio as 0%). Calcuate the excess reserve ratio for Norway in October 2020. Enter your answer in percent form without the percent sign. Round to one decimal place.arrow_forward
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