Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please help me i will give good rating Question 2 Suppose that in a hypothetical Country XYZ, the required reserve ratio is 2%, currency in
please help me i will give good rating
Question 2 Suppose that in a hypothetical Country XYZ, the required reserve ratio is 2%, currency in circulation is RM130 billion, the amount of demand deposits is RM420 billion, and excess reserves are RM5 billion. (a) Calculate the money supply (MI), the currency deposit ratio, the excess reserve ratio, and the money multiplier of Country XYZ. (b) Suppose the Central Bank of Country XYZ conducts an open market purchase of bonds held by banks of RM200 billion to boost its economy due to the covid19 pandemic. Assuming the ratios you calculated in part (a) remain the same, except that banks choose to hold all of its proceeds as excess reserves rather than loan them out. Predict the effect on M1 in Country XYZ. 1Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started