Question
Suppose that the nonbank public holds $4000 in currency and banks hold $7000 in total reserves. The banking system has a total of $20,000 in
Suppose that the nonbank public holds $4000 in currency and banks hold $7000 in total reserves. The banking system has a total of $20,000 in checkable deposits. The reserve requirement is 20%.
- Compute the monetary base.
- Compute required reserves.
- Compute excess reserves.
- Money multiplier
-Compute the excess reserves-deposit ratio.
-Compute the currency-deposit ratio.
-Compute the money multiplier. .
-Compute the money supply two ways. First, compute the money supply using the money multiplier formula above. Then, compute the money supply using the definition of the money supply
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