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2. In the hypothetical country of Middlelandia, banks are required to hold 20% of checkable deposits as reserves. Also, the public holds none of the
2. In the hypothetical country of Middlelandia, banks are required to hold 20% of checkable deposits as reserves. Also, the public holds none of the loans as currency in circulation and redeposits all the loans.
a. Complete the table (calculations should be to no more than two decimal places).
Round | Deposits | Required Reserves of 20% | Excess Reserves | New Loans | None of loan proceeds are held as currency in circulation by people | Loan proceeds redeposited |
---|---|---|---|---|---|---|
1 | $500 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
2 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
3 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
4 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
5 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
6 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
7 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
8 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
9 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
10 | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
Totals | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) | (Enter your response here.) |
b. Calculate the new money supply.
(Enter your response here.)
c. Calculate the money multiplier.
(Enter your response here.)
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