If the public has a currency ratio of 0.2 and banks have a reserve ratio of 0.2, how much cash does the central bank need to print to add $600 to the money supply? Select one: a. $1800 b. $120 c. $200 d. $600

If the public has a currency ratio of 0.2 and banks have a reserve ratio of 0.2, how much cash does the central bank need to print to add $600 to the money supply? Select one: a. $1800 b. $120 c. $200 d. $600

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter28: Monetary Policy And Bank Regulation

Section: Chapter Questions

Problem 19RQ: Explain how to use the reserve requirement to expand the money supply.

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Question

If the public has a currency ratio of 0.2 and banks have a reserve ratio of
0.2, how much cash does the central bank need to print to add $600 to
the money supply?
Select one:
a. $1800
b. $120
c. $200
d. $600

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