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(25 points) To combat the economic fallout due to the pandemic, Federal Reserve eased monetary policy in the early 2020. The monetary base (MB) was
(25 points) To combat the economic fallout due to the pandemic, Federal Reserve eased monetary policy in the early 2020. The monetary base (MB) was 3883 billion dollars and M2 was 16008 billion dollars in March, 2020. a. (5 points) Calculate the money multiplier m in March, 2020. b. (5 points) Suppose banks decide to shut down branches due to the pandemic, how does that impact household currency to deposit ratio? c. (5 points) Holding the reserve to deposit ratio constant, how the change of currency to deposit ratio will affect the money multiplier? d. (10 points) From 2017 to 2008, the MB in the US increased about 99 percent while the M2 only increased about 9.6 percent. But from 2020 to 2021, the MB in the US increased about 52 percent while the M2 increased about 24.9 percent. Give two possible reasons why the growth rate of M2 is much larger from 2020 to 2021 compared to the g
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