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In the nation of Wiknam, people hold $1,000 of currency and $4,000 of demand deposits in the only bank, Wikbank. The reserve-deposit ratio is 0.25.
In the nation of Wiknam, people hold $1,000 of currency and $4,000 of demand deposits in the only bank, Wikbank. The reserve-deposit ratio is 0.25.
Using the equations we covered earlier, calculate the following:
- The money supply (M).
- The monetary base (B).
- The money multiplier (m).
M = m x B
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