The economy of ACC contains 2000 $1 bills.
The economy of ACC contains 2000 $1 bills.
a. If people hold all money as currency, what is the quantity of money?
b. If people hold all money as demand deposits and banks maintain 100 percent reserves, what is the quantity of money?
c. If people hold equal amounts of currency and demand deposits and banks maintain 100 percent reserves, what is the quantity of money?
d. If people hold all money as demand deposits and banks maintain a reserve ration of 10 percent, what is the quantity of money?
e. If people hold equal amounts of currency and demand deposits and banks maintaina reserve ration of 10 percent, what is the quantity of money?
Homework Answers
Answer - 1. The full solution is shown below :-
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PROBLEMS AND APPLIUA Fed flies a helicopter over 5" Aven New York City and drops newly printed $100 bills. 1. What are the three functions of money? Which of the functions do the following items satisfy? Which do they not satisfy? a. A credit card b. A painting by Rembrandt c. A subway token 2. Explain how each of the following events affects the monetary base, the money multiplier, and the money supply. a. The...
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