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The Monetary System-End of Chapter Problem As a case study, the chapter discusses that the money supply fell from 1929 to 1933 because both the
The Monetary System-End of Chapter Problem As a case study, the chapter discusses that the money supply fell from 1929 to 1933 because both the currency-deposit ratio and the reserve-deposit ratio increased. Use the model of the money supply and the data in the table below to answer the following hypothetical questions. Round to the nearest hundreth, August 1929 March 1933- Money supply 26.5 19.0 Currency 3.9 55 Demand deposits 22.6 23 13.5 Monetary base 7.1 8.4 3 A Currency 3.9 55 Reserves 32 29 Money multiplier 3.7 2.3 Reserve-deposit ratio 0.14 0.21 Curfency-deposit ratio 0.17 0.41 Reserve-deposit ratio 0.14 0.21 Currency-deposit ratio 0.17 0.41 a. Calculate the money supply in 1933 if the currency-deposit ratio had risen to its 1933 level but the reserve-deposit ratio had remained at its 1929 level. Money supply b. Calculate the money supply in 1933 if the reserve-deposit ratio had risen to its 1933 level but the currency-deposit ratio had remained at its 1929 level. Money supply c. Based on your answers in a and b, which ratio had the largest impact on the money supply during that time period? the reserve-deposit ratio the currency-deposit ratio
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