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In the following data table, calculate the amount of excess reserves and the monetary base and...
5. The money multiplier In the following data table, calculate the amount of excess reserves and...
5. The money multiplier In the following data table, calculate the amount of excess reserves and the monetary base and then use the table to answer the questions that follow. Category Value (Billions of Dollars) Currency, C 450.00 Deposits, D 400.00 Reserves, R 49.00 Required Reserves, RR 46.00 Excess Reserves Monetary Base Use the previous data table to fill in the missing cells in the following table. (Hint: Round to the nearest hundredth.) Ratio Value Currency Ratio, kk Required Reserves...
Suppose, in an economy, currency in circulation (C) is $16 billions, reserves (R) held by banks...
Suppose, in an economy, currency in circulation (C) is $16 billions, reserves (R) held by banks are $4 billions, and deposits (D) by people and firms in banks are worth $ 84 billions. If there are no excess reserves, then (a) What is the money supply (M) in the economy? _______________ (b) What is the monetary base (MB)? _______________ (c) What is the currency deposit ratio ? _______________ (d) What is the reserve deposit ratio? _______________ (e) What is the...
Suppose, in an economy, currency in circulation (C) is $16 billions, reserves (R) held by banks...
Suppose, in an economy, currency in circulation (C) is $16 billions, reserves (R) held by banks are $4 billions, and deposits (D) by people and firms in banks are worth $ 84 billions. If there are no excess reserves, then (a) What is the money supply (M) in the economy? _______________ (b) What is the monetary base (MB)? _______________ (c) What is the currency deposit ratio ? _______________ (d) What is the reserve deposit ratio? _______________ (e) What is the...
2. Suppose the cash:deposit ratio is 0.04, required reserves are 10% of deposits, and excess reserves...
2. Suppose the cash:deposit ratio is 0.04, required reserves are 10% of deposits, and excess reserves are currently at 4%. a. What is the money multiplier? (round to the nearest hundredth) b. What is the supply of money if the monetary base is $1,000,000?
7. A decrease in the nonborrowed monetary base, everything else hela constant( the multiplier the same)...
7. A decrease in the nonborrowed monetary base, everything else hela constant( the multiplier the same) will cause the money supply D. Demand deposits to rise 8. Everything else held constant, a decrease in excess reserves will he money supply to rise c No change in will cause A. The money supply to rise B. The money supply to remain constant C. The money supply to fall D. Checkable deposits to rise 9. If the required reserve ratio is 15...
rect Question 2 0/1 pts The money supply equals monetary base plus money multiplier. • monetary...
rect Question 2 0/1 pts The money supply equals monetary base plus money multiplier. • monetary base divided by money multiplier. money multiplier divided by monetary base. money multiplier multiplied by monetary base. Incorrect Question 3 0/1 pts If the MI multiplier is 3 and the Fed engages in open-market purchases in the amount of S3 billion. then monetary base will increase by S3 billion decline by S9 billion. decline by S3 billion. • increase by $9 billion. rect Question...
Suppose that r = required reserve ratio = 0.20 c = {C/D} = currency ratio =...
Suppose that r = required reserve ratio = 0.20 c = {C/D} = currency ratio = 0.45 e = {ER/D} = excess reserves ratio = 0.01 t = {T/D} = time deposit ratio = 1 mm = {MM/D} = money market fund ratio = 0.70 MB = the monetary base = $1,000 billion 1 + C + + mm Given that the formula for the M2 money multiplier is m, = - -, find the value for the M2 money...
Answer the question clearly. Make sure all of your graphs are properly labeled. Write out the...
Answer the question clearly. Make sure all of your graphs are properly labeled. Write out the generic formula for the advanced money multiplier (4 points) Explain what will happen to the money multiplier and the money supply when each of the following decrease (2 points each) The C/D ratio The R/D ratio The Monetary Base c. Consider the following data. Currency $100 billion Bank reserves $200 billion Checkable deposits $1,500 billion Calculate the monetary base, the...
1. The table below shows data on the behavior of the money supply during the onset...
1. The table below shows data on the behavior of the money supply during the onset of the Great Depression. Fill in the empty cells for parts (a)-(g). August 1929 March 1933 26.5 19.0 3.9 5.5 22.6 (e) 8.4 2.9 (b) C) (g) (d) 0.41 1.109 0.817 56.24 31.78 Money Supply Currency Deposits Monetary Base Reserves Money Multiplier Reserve-Deposit Ratio Currency-Deposit Ratio Real GDP Nominal GDP (a) 3.2 2. A bank has the following entries on its balance sheet, but...
I know that the money supply (MS) = money multiplier (m) * the monetary base (B)....
I know that the money supply (MS) = money multiplier (m) * the
monetary base (B). MS=m*B
B is constant, so changes in m will influence the money
supply.
I know that m = (cr+1)/(cr+rr). Now, the answer given to us was
C. However, wouldn't an increase in cr increase m, not decrease
m?
For example, say rr is fixed at 2 (the number is arbitrary since
it's fixed) and cr is initially 5. Then m = 6/7. If cr...
2. Suppose the cash:deposit ratio is 0.04, required reserves are 10% of deposits, and excess reserves are currently at 4%. a. What is the money multiplier? (round to the nearest hundredth) b. What is the supply of money if the monetary base is $1,000,000?
7. A decrease in the nonborrowed monetary base, everything else hela constant( the multiplier the same) will cause the money supply D. Demand deposits to rise 8. Everything else held constant, a decrease in excess reserves will he money supply to rise c No change in will cause A. The money supply to rise B. The money supply to remain constant C. The money supply to fall D. Checkable deposits to rise 9. If the required reserve ratio is 15...
rect Question 2 0/1 pts The money supply equals monetary base plus money multiplier. • monetary base divided by money multiplier. money multiplier divided by monetary base. money multiplier multiplied by monetary base. Incorrect Question 3 0/1 pts If the MI multiplier is 3 and the Fed engages in open-market purchases in the amount of S3 billion. then monetary base will increase by S3 billion decline by S9 billion. decline by S3 billion. • increase by $9 billion. rect Question...
Suppose that r = required reserve ratio = 0.20 c = {C/D} = currency ratio = 0.45 e = {ER/D} = excess reserves ratio = 0.01 t = {T/D} = time deposit ratio = 1 mm = {MM/D} = money market fund ratio = 0.70 MB = the monetary base = $1,000 billion 1 + C + + mm Given that the formula for the M2 money multiplier is m, = - -, find the value for the M2 money...
1. The table below shows data on the behavior of the money supply during the onset of the Great Depression. Fill in the empty cells for parts (a)-(g). August 1929 March 1933 26.5 19.0 3.9 5.5 22.6 (e) 8.4 2.9 (b) C) (g) (d) 0.41 1.109 0.817 56.24 31.78 Money Supply Currency Deposits Monetary Base Reserves Money Multiplier Reserve-Deposit Ratio Currency-Deposit Ratio Real GDP Nominal GDP (a) 3.2 2. A bank has the following entries on its balance sheet, but...
I know that the money supply (MS) = money multiplier (m) * the
monetary base (B). MS=m*B
B is constant, so changes in m will influence the money
supply.
I know that m = (cr+1)/(cr+rr). Now, the answer given to us was
C. However, wouldn't an increase in cr increase m, not decrease
m?
For example, say rr is fixed at 2 (the number is arbitrary since
it's fixed) and cr is initially 5. Then m = 6/7. If cr...
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