Suppose that: r = required reserve ratio = 0.10 c = {C/D} = currency ratio = 0.45 e = {ER/D} = excess reserve ratio = 0.05 MB = the monetary base = $5,000 billion 1 +c Given that the formula for the money multiplier is find the value for M, the money supply. r+ e +c The money supply is $ billion. (Round your response to the nearest whole number.) Use the money multiplier to find the new value for the money supply if open market operations increase the monetary base by $200 billion. The money supply is now $ billion. (Round your response to the nearest whole number.)
Suppose that: r = required reserve ratio = 0.10 c = {C/D} = currency ratio = 0.45 e = {ER/D} = excess reserve ratio = 0.05 MB = the monetary base = $5,000 billion 1 +c Given that the formula for the money multiplier is find the value for M, the money supply. r+ e +c The money supply is $ billion. (Round your response to the nearest whole number.) Use the money multiplier to find the new value for the money supply if open market operations increase the monetary base by $200 billion. The money supply is now $ billion. (Round your response to the nearest whole number.)
Chapter25: Money Creation
Section: Chapter Questions
Problem 8SQP
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Transcribed Image Text:Suppose that:
r = required reserve ratio = 0.10
%3D
%3D
C = {C/D} = currency ratio = 0.45
%3D
%3D
%3D
e = {ER/D} = excess reserve ratio = 0.05
%3D
%3D
MB = the monetary base = $5,000 billion
%3D
1 +c
Given that the formula for the money multiplier is
find the value for M, the money supply.
r+ e +C
The money supply is $
billion. (Round your response to the nearest whole number.)
Use the money multiplier to find the new value for the money supply if open market operations increase the monetary base
by $200 billion.
The money supply is now $
billion. (Round your response to the nearest whole number.)
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