Assume that the following data describe the condition of the banking system: Total reserves...............................$100 billion Transactions deposits.................$800

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Assume that the following data describe the condition of the banking system: 

Total reserves...............................$100 billion 

Transactions deposits.................$800 billion 

Cash held by public.....................$400 billion 

Reserve requirement...............................0.10


(a) How large is the money supply (M1)?

(b) How large are required reserves?

(c) How large are excess reserves?

(d) What is the money multiplier?

(e) By how much could the banks increase their lending activity?

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The Macro Economy Today

ISBN: 978-1259291821

14th edition

Authors: Bradley R. Schiller, Karen Gebhardt

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