Question
1. In the hypothetical country of Westlandia, banks are required to hold 20% of checkable deposits as reserves, and the public holds 50% of the
1. In the hypothetical country of Westlandia, banks are required to hold 20% of checkable deposits as reserves, and the public holds 50% of the loans as currency in circulation and redeposits the remaining 50% percent of the loans.
The first row shows that 20% of the $500 is kept for reserves = $100.00.This leaves $400.00 remaining that can be loaned out, but only 50% of that amount can be used, so $400x.50=$200.00.I used the same deductions for the remaining table through row 10.The totals category is the amounts added together for each column rows 1-10.
*****b. Calculate the new money supply. (I need help with this part)
2. In the hypothetical country of Middlelandia, banks are required to hold 20% of checkable deposits as reserves, and the public holds none of the loans as currency in circulation and redeposits all of the loans.
a. Complete the table (calculations should be to no more than two decimal places).
The first row shows that 20% of the $500 is kept for reserves = $100.00.This leaves $400.00 remaining that can be loaned out.Since none of the funds are being held by the public, the excess reserve available is $400 for this situation.I used the same deductions for the remaining table through row 10.The totals category is the amounts added together for each column rows 1-10.
*****b. Calculate the new money supply. (I need help with this part)
3. In the hypothetical country of Eastlandia, banks are required to hold 10% of checkable deposits as reserves, and the public holds none of the loans as currency in circulation and redeposits all of the loans.
a. Complete the table (calculations should be to no more than two decimal places).
The first row shows that 10% of the $500 is kept for reserves = $50.00.This leaves $450.00 remaining that can be loaned out.Since none of the funds are being held by the public, the excess reserve available is $450 for this situation.I used the same deductions for the remaining table through row 10.The totals category is the amounts added together for each column rows 1-10.
*****b. Calculate the new money supply. (I need help with this part)
I do not understand how to calculate the money supply for these 3 scenarios.
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