1) Use the following links to answer the following questions. All data are in billion $.

The Currency component of M1: 12/07 - 760.6. , 12/08 - 816.2

Demand Deposits

C/D: 12/7 - 606.5, 12/8 - 780.0

a) Calculate the MI money multiplier for December of 2007 and for December of 2008.

b) Explain why the multiplier has changed the way it did and was this

change anticipated by the Federal Reserve, why or why not?

c) What has happened to the relationship between C/D = c and the money

multiplier = m between 12/07 and 12/08?

d) M/B = 12/07. - 847.370, 12/08 - 1,669.269

i) Using the data on the monetary base for 12/07 and the money multiplier for

12/07 (from above), calculate the money supply for 12/07.

ii) Using the data on the monetary base for 12/08 and the money multiplier for

12/08 (from above), calculate the money supply for 12/08.

iii) What is the percent change in the money supply between 12/07 and 12/08?

iv) Assuming a stable money multiplier as of 12/07 and the same change in the

monetary base, what would have been the percent change in the money

supply?