1Suppose we have the following banking data (in $billion):

C = $300Currency in circulation

D = $2,000Demand deposits

rr = 0.10Required reserve ratio

ER = $1,340Excess reserves in the banking system

There are no other types of deposits in the banking system.

Calculate for us the following:

Currency-deposit ratio (c) =___________

Excess-Reserves-deposit ratio (er) =_____________

Money supply =___________$billion

Monetary base =____________$billion

Money multiplier (m) =(the more realistic one)

2)Consider the ratios you calculated in Question 1 (c, er, and rr).Suppose that people decide to hold more currency and fewer deposits. As a result, the currency-deposit ratio increases to c = 0.38. Assume that all the other ratios remain unchanged.What will be the new money multiplier?

m =_________________

3)Consider the following scenario:

c = currency-deposit ratio = 0.15

rr = required reserve ratio = 0.10

Excess-reserve-deposit ratio = 2.05

So, currently the money multiplier is _______________. Suppose that,all else the same, the currency deposit ratio increases to c = 0.35. As a result, the money multiplier changes to______________.