Question
2) If the required reserve ratio is 5 percent, currency in circulation is $400 billion, required reserves are $40 billion, and excess reserves total $4
2) If the required reserve ratio is 5 percent, currency in circulation is $400 billion, required reserves are $40 billion, and excess reserves total $4 billion a. What is the M1 money multiplier? How about the monetary base and M1 money supply? b. What is the money multiplier and monetary base in each of the following cases: (note each of them is a separate and independent event) i. Required reserve ratio doubles ii. Banks decide to keep double their excess reserves iii. People decide to keep all their money in the checking accounts iv. People decide to keep all their money in checking accounts and banks do not hold excess reserves v. People decide to keep all their money in cash
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