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Consider again the same economy with two banks: Bank One and Bank Two. Partial balance sheet information for each is given below: Bank One:
Consider again the same economy with two banks: Bank One and Bank Two. Partial balance sheet information for each is given below: Bank One: $120,000 demand deposits o $15,000 total reserves on hand $30,000 equity Bank Two: o $3000 Deposit in the Fed o $10,000 total reserves on hand $8000 US government bonds $80,000 demand deposits In addition to the above information, members of the public hold $15,000 in cash, and the central bank requires that banks hold 10% of checking as required reserves (as in all class examples). Calculate the monetary base (for the whole economy), using its high powered money definition.
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