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The Monetary System - Work It Out: Question 2 In the economy of Robberia, the monetary base is $3700. People hold 30% of their money
The Monetary System - Work It Out: Question 2 In the economy of Robberia, the monetary base is $3700. People hold 30% of their money in the form of currency (and thus 70% as bank deposits). Banks hold 10% of their deposits in reserve. Throughout this question, enter all answers to THREE places after the decimal. b. One day, a rash of street robberies strikes fear in the population, and people now want to hold only 10,000% of their money in the form of currency. If the central bank does nothing, what is the new money supply? Note: Banks continue to hold 10% in reserve and the monetary base is still $3700. The new money supply equals
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