THE MONEY MULTIPLIER ' PRACTICE PROBLEMS Money Multiplier Formula 4) Use these reserve ratio values to calculate the money multiplier. _ 257 3) rr = |0% c) rr - a b) rr = 20% d) rr = 5% Change In Checkable Deposits (using rr) Change in Checkable Deposits (using m) _ r values to calculate the change In 5) Use the following m values to calculate the change in checkable deposits, a) m = 4 and AER = $800 a) 6) Use the following r checkable deposits. rr = IS% and AER = 5600 b) m = 3.5 and AER = -$500 b) rr = 50% and AER = -$400 Money Supply and Monetary Base 7) Suppose the US. economy has money in the forms listed on this table. Use this information to answer the following questions. a) What is the M] money supply! Type of Money Amount Currency in Circulation Bank Reserves at the Federal Reserve Checkable Deposits Currency in BankVauits Traveler's Checks ublic after a loan is made. But in reality.borrowers do b) What is the monetary basei c) What is the actual money multiplier in this scenario? Money Multiplier with Currency Drainage 8) When calculating the money multiplier. we assume no currency is held by the p hold currency. We can calculate the money percentage of money held by borrowers as currency. Use this formu multiplier in this situation if we know the currency drainage ratio. which is the la to calculate the money multiplier in the following questions. a) rr = l0% and Drainage Ratio = 50% I + Drainage Ratio _______._- Reserve Ratio + Drainage Ratio b) rr = 0% and Drainage Ratio = 20%