Ašsümė the following: i. The public holds no currency. ii. The ratio of reserves to deposits (0) is 0.08. iii. The demand for money is given by M = $Y(0.85 – 3.6i). The monetary base (H) is $63 billion, and nominal income ($Y) is $4.9 trillion. In the absence of any currency holdings by the public, the demand for money (M) is equivalent to the demand for checkable deposits, and the demand for central bank money (H) is equivalent to the demand for reserves. Given the ratio of reserves to deposits (0 = 0.08), the supply of central bank money (H = $63 billion), and the fact that equilibrium prevails in both the market for central bank money (H° = H and the money market (M = M), it can be deduced that the overall supply of money is $ billion. (Enter your response %3D as an integer.)
Ašsümė the following: i. The public holds no currency. ii. The ratio of reserves to deposits (0) is 0.08. iii. The demand for money is given by M = $Y(0.85 – 3.6i). The monetary base (H) is $63 billion, and nominal income ($Y) is $4.9 trillion. In the absence of any currency holdings by the public, the demand for money (M) is equivalent to the demand for checkable deposits, and the demand for central bank money (H) is equivalent to the demand for reserves. Given the ratio of reserves to deposits (0 = 0.08), the supply of central bank money (H = $63 billion), and the fact that equilibrium prevails in both the market for central bank money (H° = H and the money market (M = M), it can be deduced that the overall supply of money is $ billion. (Enter your response %3D as an integer.)
Chapter26: Monetary Policy
Section: Chapter Questions
Problem 4SQP
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Transcribed Image Text:Assume the following:
i. The public holds no currency.
ii. The ratio of reserves to deposits (0) is 0.08.
iii. The demand for money is given by M° = $Y(0.85 – 3.6i).
The monetary base (H ) is $63 billion, and nominal income ($Y ) is $4.9 trillion.
In the absence of any currency holdings by the public, the demand for money (M°) is equivalent to the demand for checkable deposits, and the demand for
central bank money (H°) is equivalent to the demand for reserves.
Given the ratio of reserves to deposits (0 = 0.08), the supply of central bank money (H = $63 billion), and the fact that equilibrium prevails in both the market
for central bank money (H° = H) and the money market (M = M°), it can be deduced that the overall supply of money is $
as an integer.)
billion. (Enter your response
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