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ABBIX has a complex financial system with the following relationships: The ratio of required reserves to total deposits is 15 percent , and the ratio
ABBIX has a complex financial system with the following relationships: The ratio of required reserves to total deposits is 15 percent , and the ratio of noncheckable deposits to checkable deposits is 40 percent . In addition currency held by the nonbank, public amounts to 20 percent of checkable deposits. The ratio of government deposits to checkable deposits is 8 percent. Initial excess reserves are 900 million C. What will happen to ABBIX's money multiplier if the reserve requirement decreases to 10 percent while the ratio of noncheckable deposits to checkable deposits falls to 30 percent? Assume the other ratios remain as originally stated. D. Based on the information in (c) estimate the maximum dollar amount of checkable deposits as the size of the M1 money supply
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