a, calculate the amount of the monetary base: illion antity of the money supply: h io of reserves to deposits: or your answer rounded to the four decimal places.) io of currency to deposits: your answer rounded to the four decimal places.) oney multiplier: er your answer rounded to the four decimal places.)

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter13: Money And The Banking System
Section: Chapter Questions
Problem 8CQ
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Question
In the economy, the following statistics describe the money supply:
CU = $1,500 billion
RES= $200 billion
DEP = $4,000 billion
Given these data, calculate the amount of the monetary base:
BASE = $
billion
Calculate the quantity of the money supply:
M = $
billion
Calculate the ratio of reserves to deposits:
res= (Enter your answer rounded to the four decimal places.)
Calculate the ratio of currency to deposits:
cu = (Enter your answer rounded to the four decimal places.)
Calculate the money multiplier:
mm =
=(Enter your answer rounded to the four decimal places.)
Now, suppose the central bank engages in open market sales in the amount of $25 billion. Suppose that when this happens, both cu and res do not change. However,
the bank's open-market sales will affect M, CU, RES, and DEP.
Calculate the new value of the monetary base:
BASE=$ billion
Transcribed Image Text:In the economy, the following statistics describe the money supply: CU = $1,500 billion RES= $200 billion DEP = $4,000 billion Given these data, calculate the amount of the monetary base: BASE = $ billion Calculate the quantity of the money supply: M = $ billion Calculate the ratio of reserves to deposits: res= (Enter your answer rounded to the four decimal places.) Calculate the ratio of currency to deposits: cu = (Enter your answer rounded to the four decimal places.) Calculate the money multiplier: mm = =(Enter your answer rounded to the four decimal places.) Now, suppose the central bank engages in open market sales in the amount of $25 billion. Suppose that when this happens, both cu and res do not change. However, the bank's open-market sales will affect M, CU, RES, and DEP. Calculate the new value of the monetary base: BASE=$ billion
Calculate the new value of the monetary base:
BASE= $
billion
Calculate the new value of the money supply:
M = $ billion
Very challenging: Calculate the new amount of bank deposits:
DEP = $ billion
Find the new total amount of currency held by the non-bank public:
CU = $ billion
Calculate the new amount of bank reserves:
RES = $ billion
Transcribed Image Text:Calculate the new value of the monetary base: BASE= $ billion Calculate the new value of the money supply: M = $ billion Very challenging: Calculate the new amount of bank deposits: DEP = $ billion Find the new total amount of currency held by the non-bank public: CU = $ billion Calculate the new amount of bank reserves: RES = $ billion
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