Homework Answers
Answer: Decrease by $800 billions
explanation:: here, money multiplier = 1/ reserve ratio
= 1/ 0.25
= 4
so here the money supply decrease by = $200*4 = 800 billions
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Answer Part B please 2. Suppose that currency in circulation is $600 billion, the amount of...
Answer Part B please
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1. Suppose that currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, required reserve on checkable deposits is 10% and excess reserves are $15 billion. a. Calculate the money supply, the currency deposit ratio, the excess reserve ratio, and the money multiplier. Suppose the central bank conducts an unusually large open market purchase of bonds held by banks of $1400 billion due to a sharp contraction in the economy. Assuming the ratios, you calculated in...
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Answer Part B please
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