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Suppose that r = required reserve ratio = 0.10 c = {C/D) = currency ratio = 0.25 = {ER/D} = excess reserves ratio = 0.03
Suppose that r = required reserve ratio = 0.10 c = {C/D) = currency ratio = 0.25 = {ER/D} = excess reserves ratio = 0.03 t = {T/D) = time deposit ratio = 3 mm = {MM/D} = money market fund ratio = 0.60 MB = the monetary base = $1,000 billion 1 + C + + mm Given that the formula for the M2 money multiplier is m2 = r+ e + c find the value for the M2 money supply. The M2 money supply is $billion. (Round your response to the nearest whole number.) Use the M2 money multiplier to find the new value for the money supply if open market operations increase the monetary base by $100 billion. The M2 money supply is now $1 billion. (Round your response to the nearest whole number.)
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