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For the next four questions, consider an economy described by the following information: • Demand deposits total $100,000 • C
Again, consider an economy described by the following information: • Demand deposits total $100,000 • Cash in bank vaults tot
Again, consider an economy described by the following information: • Demand deposits total $100,000 • Cash in bank vaults tot
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Answer : Economy currency ratio = C / D =$25000/$1,00,000 =0.25

Answer : Economy money multiplier = (1+ currency drain ratio) / (Currency drain ratio +reserve ratio) =(1+0.25)/(0.25+0.2) =1.25/0.45 =2.78

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