Question
consider an economy described by the following information: Demand deposits total $100,000 Cash in bank vaults totals $40,000 The public holds cash of $30,000 US
consider an economy described by the following information: Demand deposits total $100,000 Cash in bank vaults totals $40,000 The public holds cash of $30,000 US government bonds held by banks total $10,000 Banks' deposits in the Fed total $15,000
A. Calculate this economy's (economy-wide) currency ratio.
B. Calculate the monetary base for this economy
C. Calculate this economy's real-world (money) multiplier
D. Let's say that one bank in the economy has $100 in excess reserves and that there are enough banks in total for the full multiplied money creation process to take place. Calculate the amount (the actual amount, not the maximum) that the entire banking system -- all banks working together -- will create in new money, using these ER as your starting point.
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