What about in the opposite scenario? If the central bank withdraws $5000 from circulation, in a...
What about in the opposite scenario? If the central bank withdraws $5000 from circulation, in a population with a currency ratio of 0.05 and a reserve ratio of 0.1, what is the final effect on the money supply?
Homework Answers
Money multiplier = (1+c)/(c+r) = (1+0.05)/(0.05+0.1)= 7
Money supply decreases by 7*5000= 35000
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What about in the opposite scenario? If the central bank
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1. Suppose that currency in circulation is $600 billion, the amount of checkable deposits is $900...
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