An economy has a reserve ratio equals to 12%. The society is holding 10% of the deposit in the form of cash. a) If the high-powered money (H) is RM100 billion, how much is the money supply in this economy? b) Say the Central Bank targets the money supply is RM650 billion. How much the high-powered money (H) in question a) above should change to achieve this target? *Prioritize question b
An economy has a reserve ratio equals to 12%. The society is holding 10% of the deposit in the form of cash. a) If the high-powered money (H) is RM100 billion, how much is the money supply in this economy? b) Say the Central Bank targets the money supply is RM650 billion. How much the high-powered money (H) in question a) above should change to achieve this target? *Prioritize question b
Chapter13: The Federal Reserve System
Section: Chapter Questions
Problem 10WNG
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An economy has a reserve ratio equals to 12%. The society is holding 10% of the deposit in the form of cash.
a) If the high-powered money (H) is RM100 billion, how much is the money supply in this economy?
b) Say the Central Bank targets the money supply is RM650 billion. How much the high-powered money (H) in question a) above should change to achieve this target?
*Prioritize question b
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