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ous attemp Total reserves : $ 30 billion Transactions deposits: $ 600 billion Cash held by public: $ 200 billion Required reserve ratio: 0. 05
ous attemp Total reserves : $ 30 billion Transactions deposits: $ 600 billion Cash held by public: $ 200 billion Required reserve ratio: 0. 05 Instructions: Enter your responses as a whole number. In part b, round your response to one decimal place. a. How large is the money supply (M1)? 800 billion b. How large are excess reserves? $ 0 billion Now assume that the public transfers $30 billion in cash into transactions accounts. c. What would happen to the money supply initially (before any lending takes place)? Assuming the $30 billion in cash is not new money in the system, M1 will |not change d. How much would the total lending capacity of the banking system be after this portfolio switch? $ billion e. How large would the money supply be if the banks fully utilized their lending capacity? billion
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