Bank reserves are a commercial banks cash holdings physically held by the bank, and deposits held in the banks account with the central bank Under the fractional reserve banking system used in most countries, central banks typically set minimum reserve requirements that require commercial banks under its purview to hold cash or deposits at the central bank equivalent to at least a prescribed percentage of their liabilities, such as customer deposits Altogether, the banks in the United Arab Emirates are holding reserves consisting of required reserves of AED 60 billion, and excess reserves of AED 30 billion The amount of currency in the hands of the public is AED 45 billion, and the deposit accounts equal AED 240 billion Compute the money multiplier, showing all intermediate steps, formulas used, and calculations, along with the final answer to get full marks (2 5 points) Determine the monetary base, showing all intermediate steps, formulas used, and calculations, along with the final answer to get full marks (1 5 points) Estimate the quantity of money using TWO different methods, showing all intermediate steps, formulas used, and calculations, along with the final answer to get full marks (1 point)

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 02, 2024

Bank reserves are a commercial banks cash holdings physically held by the bank, and deposits held in the banks account with the central bank.
Under the fractional-reserve banking system used in most countries, central banks typically set minimum reserve requirements that require commercial banks under its purview to hold cash or deposits at the central bank equivalent to at least a prescribed percentage of their liabilities, such as customer deposits.
Altogether, the banks in the United Arab Emirates are holding reserves consisting of required reserves of AED 60 billion, and excess reserves of AED 30 billion.
The amount of currency in the hands of the public is AED 45 billion, and the deposit accounts equal AED 240 billion.

Compute the money multiplier, showing all intermediate steps, formulas used, and calculations, along with the final answer to get full marks. (2.5 points)

Determine the monetary base, showing all intermediate steps, formulas used, and calculations, along with the final answer to get full marks. (1.5 points)

Estimate the quantity of money using TWO different methods, showing all intermediate steps, formulas used, and calculations, along with the final answer to get full marks. (1 point)