Homework Answers
a) Excess reserves = e*DD = 0.25*800 = 200
b) Monetary base = currency + required reserves excess reserves = 1000 + rr*D + e*D
= 1000 + 0.1*800 + 0.25*800
= 1280
c) Money multiplier = (1 + C/D)/(C/D + rr + e)
= (1 + 1.25)/(1.25 + 0.1 + 0.25)
= 1.40625
d) Money supply M = m x MB
= 1.40625 * 1280
= 1800
e) Money multiplier = (1 + C/D)/(C/D + rr + e)
= (1 + 1.25)/(1.25 + 0.15 + 0.25)
= 1.36363
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Use the information below to answer the following questions: C=currency = 1000. Deposits=D = 800. 1.1....
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