Suppose rr = required reserve ratio = 0.1 C = currency in circulation = $1,200 billion D = checkable deposits = $1,600 billion ER = excess reserves = $2,500 billion M = money supply (M1) = C + D = $2,800 billion The currency ratio (currency-to-deposits ratio) is 0.75 and the excess reserve ratio is [Select] The money multiplier is [Select] Answer 1: 0.75 Answer 2: 1.56 Answer 3: 0.1
Suppose rr = required reserve ratio = 0.1 C = currency in circulation = $1,200 billion D = checkable deposits = $1,600 billion ER = excess reserves = $2,500 billion M = money supply (M1) = C + D = $2,800 billion The currency ratio (currency-to-deposits ratio) is 0.75 and the excess reserve ratio is [Select] The money multiplier is [Select] Answer 1: 0.75 Answer 2: 1.56 Answer 3: 0.1
Chapter25: Money Creation
Section: Chapter Questions
Problem 9SQP
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Question 1
Suppose
rr = required reserve ratio = 0.1
C = currency in circulation = $1,200 billion
D = checkable deposits = $1,600 billion
ER = excess reserves = $2,500 billion
M = money supply (M1) = C + D = $2,800 billion
The currency ratio (currency-to-deposits ratio) is 0.75 and the excess reserve ratio is
[Select]
The money multiplier is [Select]
Answer 1:
0.75
Answer 2:
1.56
Answer 3:
0.1](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fea36a997-e774-4130-9a2a-0861d0514ec2%2F546045f2-e923-40aa-b29e-7ebce39cd14f%2Fo42u55k_processed.png&w=3840&q=75)
Transcribed Image Text:Partial
Question 1
Suppose
rr = required reserve ratio = 0.1
C = currency in circulation = $1,200 billion
D = checkable deposits = $1,600 billion
ER = excess reserves = $2,500 billion
M = money supply (M1) = C + D = $2,800 billion
The currency ratio (currency-to-deposits ratio) is 0.75 and the excess reserve ratio is
[Select]
The money multiplier is [Select]
Answer 1:
0.75
Answer 2:
1.56
Answer 3:
0.1
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